Sumitomo Chemical 100 Years Sumitomo Chemical 100 Years Published: August 2014 Published by Sumitomo Chemical Co.,Ltd

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Sumitomo Chemical 100 Years Sumitomo Chemical 100 Years Published: August 2014 Published by Sumitomo Chemical Co.,Ltd. Production and editing : Sumitomo Chemical Co.,Ltd., Corporate History Editorial Office 27-1, Shinkawa 2-chome, Chuo-ku, Tokyo, Japan Production assisted by Dai Nippon Printing Co.,Ltd. Printed in Japan by Dai Nippon Printing Co.,Ltd. CONTENTS

Chairman’s Message President’s Message The Path to a Global Chemical Company

1. The History of Sumitomo 8

2. History of Sumitomo Fertilizer Works 10

3. Going from a Fertilizer Manufacturer to a Chemical Company 14

4. Moving into Fine Chemicals 16

5. Post-war Recovery 18

6. Moving into the Agricultural Chemicals Business 20

7. Growth of the Pharmaceuticals Sector 22

8. Entering the Field of Petrochemicals 24

9. Dealing with the Oil Crises 26

10. Rise and Decline of Aluminum Business 28

11. Construction of Singapore Petrochemical Complex 32

12. Separation of Pharmaceutical Business from Sumitomo Chemical and Inauguration 34 of Dainippon Sumitomo Pharma Co., Ltd.

13. Expansion of Agricultural Chemicals Business 36

14. IT-related Chemicals Sector Established and Business Grows 38

15. Progress of the Rabigh Project 40

16. Aiming to be a Truly Global Chemical Company 42

17. For a Better Tomorrow 46 Reports from Regional Headquarters 48 Report from Beijing by Sumitomo Chemical (China) Co., Ltd. 48 Report from Singapore by Sumitomo Chemical (Asia Pacific) Pte Ltd 50 Report from Brussels by Sumitomo Chemical Europe S.A./N.V. 52 Report from New York by Sumitomo Chemical America, Inc. 54 The Sumitomo Spirit and Sumitomo Chemical’s Business Philosophy 56 Recent Sales and Profits 57 Sumitomo Chemical Locations in Japan 58 Major Companies of Sumitomo Chemical Group: Japan 59 Major Companies of Sumitomo Chemical Group: International 60 Chronology of Sumitomo Chemical 62 Chairman’s Message

In October 2015, Sumitomo Chemical will cele- triggered by the fall of Lehman Brothers and the sub- brate its 100 year anniversary. sequent global recession. Even in the face of these As a member of the Sumitomo Group, which has challenges, however, we have driven innovation to a history and tradition dating back 400 years, we create new opportunities for growth and carried out a have carried on Sumitomo’s business philosophy, series of strategic initiatives to build a strong founda- which gives priority to maintaining society’s trust while tion for future growth—the expansion of our agricul- emphasizing that our business must not only ben- tural chemicals business overseas, the strengthening efit our own interests but also society at large. This of our pharmaceutical business, the establishment of philosophy is, in fact, firmly embedded in Sumitomo the IT-related Chemicals Sector, our Singapore pet- Chemical’s DNA. The company began as a fertiliz- rochemical project, and the Rabigh Project in Saudi er manufacturing plant of the House of Sumitomo, Arabia. to transform harmful sulfur dioxide emissions from Sumitomo Chemical will remain firmly committed smelting operations at the Besshi Copper Mine into to contributing, through innovation, to solving a range calcium superphosphate fertilizers. In other words, it of challenges facing society, and will continue to strive was established not merely for financial gain, but to to achieve strong and sustained growth by reinvent- contribute to the nation and society by providing a ing itself to meet the evolving needs of the times. solution to an environmental problem and helping to I sincerely hope that you will learn from Sumitomo increase agricultural production. Chemical’s 100 year history and take action to bring Sumitomo’s business philosophy also stresses about change, driving the company’s dynamic growth that we should keep a close watch on the changing of into its second century. the times, carefully weighing opportunities and risks, August 2014 and seeking long-term sustainable growth, rather than chasing short-term gains. Over the past one hundred years, Sumitomo Chemical has put this principle into practice, striving to achieve growth by meeting the needs of the times and continuously developing innovative new technologies. Along the way, we have encountered enormous upheavals, including World War II and its aftermath, the two oil crises of the 1970s, the end of the Cold War, recessions caused by the overvalued yen, the bubble economy of the late 1980s and its collapse, and the financial crisis

Osamu Ishitobi Chairman & CEO Sumitomo Chemical Co., Ltd. President’s Message

Next year will be the 100th anniversary since global challenges, such as issues relating to the envi- Sumitomo Chemical started its operation as a fertilizer ronment, natural resources, energy, and food supply. manufacturing plant of the House of Sumitomo, ship- The Sumitomo Chemical Group will continue to pro- ping out the first lot of calcium superphosphate fertil- vide effective solutions to these challenges by draw- izer from Niihama, Japan, on October 4, 1915. ing on the power of chemistry, and to contribute to In its early years, Sumitomo Chemical worked to building better lives by developing various businesses expand its business into the manufacturing of ammo- that meet the evolving needs of the times and by con- nia and other industrial chemicals, as well as alumi- tinuously delivering technological innovation. num, to make its way into the modern chemical indus- This booklet is to commemorate our upcoming try. In the 1950s, Sumitomo Chemical moved into the 100th anniversary and to help share the company’s petrochemical business well before its competitors, history with all members of the Sumitomo Chemical and enhanced its fine chemical businesses, thereby Group around the world. Let us take a look back at becoming a full-fledged diversified chemical com- the path that has brought us here and move forward pany. From then on, we have been pressing ahead together in unity to make our next century a brilliant with the globalization of our businesses in the areas one. of petrochemicals, ICT-related materials, agricultural August 2014 chemicals and pharmaceuticals. The very reason that Sumitomo Chemical has been able to achieve growth over nearly one hundred years, surviving hard times along the way, is because the people at this company have boldly and unflinchingly carried out business restructuring and other major change initiatives to meet the needs of the times. This history is a great source of confidence and pride for me. Times are changing more rapidly and more significantly. I would like each of you at the Sumitomo Chemical Group to continue to demon- strate a can-do spirit, take on new challenges, and explore new paths to achieve strong and sustained growth. In particular, the chemical industry is being called upon to take an even greater role in solving pressing

Masakazu Tokura President & COO Sumitomo Chemical Co., Ltd. The Path to a Global Chemical Company

Sumitomo Chemical was established in 1913 as a fertilizer plant under direct management of Sumitomo General Head Office and commenced business in 1915. Thus Sumitomo Chemical is looking forward to its 100th anniversary in 2015. When production of fertilizer (calcium superphosphate) began at the end of 1915, there were only 158 employees. As of the end of March 2014, Sumitomo Chemical has grown to become a leading chemical company in the world, with affiliates in 33 countries, 164 consolidated subsidiaries and more than 30,000 employees. Looking back at the hundred-year history of this global chemical company, we can divide it into three thirty-year periods plus the most recent decade.

Building the foundation of a chemical Diversifying into petrochemicals and company fine chemicals

The thirty years following the start of business During the next thirty years, Sumitomo Chemical was the age of “building the foundation of a chem- entered the fields of petrochemicals and fine chemi- ical manufacturer.” Sumitomo Fertilizer Works was cals. In 1944, Sumitomo Chemical merged with Japan founded to prevent pollution caused by sulfur dioxide Dyestuff Manufacturing Company (JDMC) and entered gas emissions from copper smelting. Its first prod- the field of fine chemicals. Pynamin, a household ucts were sulfuric acid and calcium superphosphate. insecticide, was launched in 1953, the first step into Introduction and development of new technology led the field of agricultural chemicals. Then, in 1958, an to the production of ammonia, nitric acid, methanol, ethylene plant was completed in Ehime Prefecture, formalin, and other industrial chemicals, forming a and Sumitomo Chemical began its petrochemical diverse product range and the foundation for a chemi- business. A large ethylene plant in Chiba Prefecture cal manufacturer. was built in 1965, and business expanded in tandem with the era of rapid growth of the Japanese economy.

View of the ammonia plant (Ehime)

Night view of the ethylene plant (Chiba)

Fertilizer transport ship

Actively promoting global business Becoming a truly global chemical company

During the thirty years beginning in the 1970s, The last decade was characterized by the pro- Sumitomo Chemical entered the age of global expan- motion of globally integrated management. Mega- sion. These years brought dramatic change due to a competition has accelerated since the turn of the series of external factors: major oil crises, recession century, and in FY 2004 (ended March 31, 2005), due to overvaluation of the yen, and the burst of the Sumitomo Chemical set forth as a goal “becoming economic bubble. Sumitomo Chemical has continued a truly global chemical company” in the Corporate to undertake reforms to keep in step with shifts in the Business Plan FY 2004-2006. In keeping with this global economy and society: restructuring its busi- goal, Sumitomo Chemical has become involved with nesses by leaving fields that prove unprofitable, mov- the Rabigh Project, expanded its IT-related Chemicals ing into the petrochemical business in Singapore and Sector, and promoted globalization of the Sumitomo expanding overseas enterprises in specialty chemical Chemical Group as a whole. During FY 2010, net businesses such as agricultural chemicals. The ICT sales for consolidated subsidiaries overseas exceed- (Information and Communication Technology) industry ed 50% of Sumitomo Chemical’s net sales, with over- saw rapid development in the 1990s, which meant seas production accounting for more than 40% of the growth in the IT-related chemicals field. Sumitomo company’s total. Chemical responded by expanding its business with Looking toward the second century of this global new overseas production bases. chemical company, the next step will be nurturing new business under the philosophy of creating new values with “Creative Hybrid Chemistry.”

Petro Rabigh begins ethane cracker operations Dainippon Sumitomo Pharma Co.,Ltd. established IT-related Chemicals Sector established

Second phase of Singapore Petrochemical Complex begins operations

Construction site of PCS second phase ethylene facilities (Singapore) Tsukuba Research Laboratory established Valent U.S.A. Corp. established in the United States

Sumitomo Pharmaceuticals Co., Ltd. established First phase of Singapore Petrochemical Complex begins operations

Misawa Works begins operations

Takarazuka Research Laboratory established

Sumitomo Chiba Chemical Co., Ltd. established

Main facilities of Misawa Works Sumithion launched as an insecticide for agricultural use

Production of ethylene and its derivatives begins in Ehime

Pynamin launched as an insecticide for household use

Sumitomo Chemical merges with Japan Dyestuff Manufacturing Company

Full-scale production of methanol and formalin begins

Name changed to Sumitomo Chemical Co., Ltd. / Completion of first plant in Japan for large-scale production of sulfuric acid produced by contact process and Sumitomo Chemical’s first nitric acid plant / Enters the aluminum business Full-scale production of ammonia and ammonium sulfate begins

The Sumitomo Fertilizer Works, Ltd. established

Sumitomo Fertilizer Works opens for business Sumitomo Fertilizer Works founded 1 The History of Sumitomo

Sumitomo Chemical is a company in the Sumitomo Group, which has a history that dates back about 400 years to the end of the 16th century. Starting with copper refining business, the House of Sumitomo gradually expanded into copper mining and exports. The Besshi Copper Mine, in particular, played a crucial role in Sumitomo’s growth and modernization. Even today, every entity of the Sumitomo Group carries on the original spirit of the House of Sumitomo, as encapsulated in Sumitomo’s Business Principles.

Statue of Masatomo Sumitomo. (Source: Sumitomo Historical Archives)

Commencement of the Sumitomo business The history of Sumitomo starts with two pre-em- inent men who were instrumental in founding the Sumitomo business. One was Masatomo Sumitomo (1585-1652), the founder of the House of Sumitomo. Born into a samu- rai family, he became a disciple of a Buddhist priest in Kyoto at the age of 12, eventually becoming foremost among the disciples. Masatomo’s Buddhist denomination, however, lost the favor of the ruling regime led

by the Tokugawa family, and was forcibly absorbed Drawing of nanban-buki copper processing from Kodo Zuroku, a pictorial booklet about copper pro- into another denomination. Under the circumstanc- duction issued by the Sumitomo Family at the beginning of the 19th century es, Masatomo decided to leave the priesthood and (Source: Sumitomo Historical Archives) began a shop to deal in books and medicine in Kyoto, but continued throughout his lifetime to practice his faith in the secular world. Masatomo’s attitude toward business, based on his wisdom and virtuous char- ried Masatomo Sumitomo’s daughter and took the acter, has been handed down over the centuries and name Tomomochi Sumitomo. Tomomochi succeed- today constitutes the business principles upheld by ed Riemon’s business, and the House of Sumitomo the Sumitomo Group Companies, including Sumitomo came to be known for its copper business. In 1623, Chemical. Tomomochi expanded the family business from Kyoto The other man instrumental in founding Sumitomo to Osaka, where he began a copper export busi- was Riemon Soga (1572-1636), who married the elder ness. Father Riemon and son Tomomochi taught their sister of Masatomo. In 1590, Riemon began a copper unique technology to Osaka copper refiners. As a refining and smithing business in Kyoto. Taking cues result, Osaka prospered as a hub for copper refining, from Portuguese he knew, he eventually developed and the House of Sumitomo was recognized to be its a unique technology for separating silver from crude leader. copper (“nanban-buki” copper processing). Until then, Japan exported its copper still containing silver. By The Opening of the Besshi Copper Mine applying Riemon’s new technology, Japan was able to After several decades, the House of Sumitomo retrieve silver in copper ore. ventured into the copper mining business. In 1690, The first son Rihei (1607-1662) of Riemon mar- Sumitomo discovered copper in Ehime Prefecture

8 Sumitomo Chemical 100 Years

and opened the Besshi a metamorphosis as it shifted from a traditional family Copper Mine. Besshi stead- business to become a modern corporation. ily increased its copper pro- In 1882, Saihei Hirose, then head of the board duction and in 1698 recorded of directors, received an order from Tomochika 1,521 tons, or one-fourth of Sumitomo (1843-1890), the twelfth generation head of Japan’s total copper output at the House of Sumitomo, to establish governing rules that time. for the House of Sumitomo, incorporating the spirit Nearly two centuries later, originating from founder Masatomo Sumitomo, and in 1868, the copper produc- stipulating matters of organization and operations. Saihei Hirose (Source: Sumitomo tion at Besshi fell to about Historical Archives) In 1891, the governing rules were separated into 400 tons. Saihei Hirose, who two parts, corporate rules and family constitution. became the general manager of the Besshi Copper At the very beginning of the corporate rules section, Mine in 1865 and would later become the first Director Sumitomo’s Business Principles were proclaimed as General of the House of Sumitomo, modernized the follows: mine based on a prospectus for the rationalization of 1. Sumitomo shall achieve prosperity based on the mine compiled by a French engineer. In addition, solid foundation by placing prime importance Hirose introduced western technology, such as dyna- on integrity and sound management in the con- mite, rock drills, steam engines and coke to replace duct of its business. charcoal in smelting copper. As a result, in 1888, 2. Sumitomo’s business interest must always be Besshi copper production rose to a record 1,745 tons. in harmony with public interest; Sumitomo shall adapt to good times and bad times but will not Sumitomo’s Business Principles pursue immoral business. In 1868, Japan experienced a drastic change. Sumitomo’s Business Principles remain in effect The 250-year rule of the Tokugawa Shogunate came to this day, functioning as fundamental guiding prin- to a close and the new government promoted the ciples for the Sumitomo Group Companies, including modernization of Japan by opening the country to the Sumitomo Chemical. rest of the world. A new constitution was adopted in 1889, and the Imperial Diet was established in 1890. During this time, the House of Sumitomo underwent

The Besshi Mine Railway, opened in 1893 (Source: Sumitomo Historical Archives)

Block print of the Besshi Copper Mine (Source: Sumitomo Historical Archives)

9 2 History of Sumitomo Fertilizer Works

Sumitomo Fertilizer Works, the predecessor of Sumitomo Chemical, was established with two missions. One was to resolve the pollution caused by the gas emissions from copper production and the other was to produce fertilizers in an effort to help farmers improve their harvests. Sumitomo Chemical commenced its business based on the spirit of corporate social responsibility (CSR), contributing to society through its business activities, long before the term became popular. Sumitomo Fertilizer Works was established and began construction, preparation for production, and sales & marketing in 1913 under direct management of Sumitomo General Head Office. Actual sales started in 1915 and 10 years later, the business was incorporated as The Sumitomo Fertilizer Works, Ltd.

Copper smelting plants in Niihama in Ehime (Source: Sumitomo Historical Archives)

Resolving Gas Emission Pollution faced an unexpected prob- Several measures introduced by Saihei Hirose lem. In 1884 and 1888, the for modernization of the Besshi Copper Mine were Besshi Copper Mine built immensely successful and production increased to smelting plants using west- 3,000 tons in 1897, up from 422 tons in 1868. By 1909 ern technology in Niihama this figure doubled to 6,000 tons. As the Besshi Copper City, Ehime Prefecture. It Mine was modernized and its copper business grew, quickly became evident that some of the mining operations were separated and fur- the plants emitted gas con- Teigo Iba (Source: Sumitomo Historical ther developed into new businesses, and the Sumitomo taining sulfur dioxide that Archives) Group began to take form. Charcoal and mine tim- damaged crops grown in surrounding fields. The situa- ber operations gave rise to forestry business. Civil tion became more serious when full-scale copper pro- engineering developed into the construction business. duction began in 1894. Local farmers made appeals to Equipment repair and production grew into a machin- the prefectural government for countermeasures. ery manufacturing industry. Sumitomo expanded its To solve the gas emission issue, Teigo Iba (the business into the copper rolling industry to process the second Director General of the House of Sumitomo) mine’s copper, and related technology spread to elec- was assigned to oversee the Besshi Copper Mine. He tric wire and metals operations. The establishment of a sought a fundamental solution and took the radical bank and of warehouses funded by the earnings from step of relocating the plant and smelting operation to the mine was followed by expansion into insurance, Shisaka Island, an uninhabited island 20 kilometers trust banking, and other financial areas. offshore of Niihama. The estimated cost of the move In the meantime, the expansion of copper smelting was equivalent to two years of profits of the Besshi

10 Sumitomo Chemical 100 Years

Copper Mine, and ultimately Seto Inland Sea coast. cost three times as much. At this point, Sumitomo decided that pollutants Iba also undertook had to be eradicated. In other words, to control sul- reforestation of the moun- fur dioxide generated by smelting, they decided to tains around the mine produce sulfuric acid from sulfide ore, and use it to that had been denuded make calcium superphosphate. Not only would this due to the gas emissions eliminate pollution, but it would provide affordable fer- and deforestation. As the tilizers to farmers and contribute to agriculture. To put amount of copper produced this plan into action, Sumitomo Fertilizer Works, the Masaya Suzuki (Source: Sumitomo Historical increased, more and more Archives) predecessor of Sumitomo Chemical, was established. wood was consumed in the form of firewood, char- Due to high production cost with the low level of coal, and pit prop. About 60,000 trees per year had technology of those days as well as the markets for been planted, but in 1897 this figure leaped to one sulfuric acid and calcium superphosphate not being million and surpassed two million by 1901. Iba was large enough, Sumitomo found it would be difficult to quoted as saying that Sumitomo must return the turn a profit. Some executives insisted that it would be entire mountain area around Besshi to its former lush better to sell sulfide ore rather than processing it into natural state. Iba’s work was carried on by Masaya sulfuric acid, but Director General Suzuki declared Suzuki, the third Director General, who expanded the that he would maintain a policy of pursuing the good Sumitomo forestry business throughout the country. of both mining and agriculture. In 1909, at a meeting with the leaders of the agricultural community, he was Toward a Fundamental Solution recorded as saying the following. An enormous amount of money was invested in “If a way to rid gas emissions of sulfur dioxide were the Shisaka Island Smelting Works as a way to solve invented, Sumitomo would be fully prepared to con- the gas emission problem, but it did not meet expec- struct the appropriate facilities, even if it were more tations. expensive than the cost of compensating the damag- Immediately after the new offshore plant went es of the gas emissions.” into operation in January 1905, the villages on the Sumitomo has always stood by the notion of “har- shore opposite it began to complain of damage. It mony between the individual, the nation and society.” turned out that sulfur dioxide was not dispersed in In other words, Sumitomo’s undertakings, while bene- the atmosphere and rendered harmless, but instead fiting Sumitomo itself, must at the same time promote blown 20 kilometers over open water to, once again, the welfare of the country and of society. The manner destroy crops. Pollution, as a result, spread even fur- in which Sumitomo solved the problem of the gas ther, to areas west of Niihama and other parts of the emissions was one of the best examples of Sumitomo

Shisaka Island Smelting Works (Source: Sumitomo Historical Archives) 11 Calcium superphosphate warehouse

land in Niihama in Ehime. Plans were to build facilities to produce sulfuric acid as well as nitric acid, and to man- Notice announcing establishment of Sumitomo Fertilizer Works ufacture 75,000 tons of calcium superphosphate and a (Source: Sumitomo Historical Archives) compound fertilizer a year using the technology of Ernst adhering to this principle. Taking responsibility to Hartmann GmbH, a German company. Unfortunately, resolve environmental problems and contributing to this was rendered impossible with the outbreak of World society through business activities is what is now War I. Two sulfuric acid facilities with a conventional pro- called CSR, and we can see that this principle has cess were built instead. been at work in Sumitomo Chemical from its start. The chemical industry in Japan was still in its developmental stage, and calcium superphosphate Establishing Sumitomo Fertilizer Works was the only product that required large amounts of While a settlement was reached on compensation sulfuric acid. At the time, calcium superphosphate for gas emissions in November 1910, on September was made by many small suppliers and the market 22, 1913, Sumitomo Fertilizer Works, the predecessor was fraught with excessive competition. of Sumitomo Chemical, was established under direct The key to success in the fiercely competitive fer- management of Sumitomo General Head Office. The tilizer business was a strong sales network. Sumitomo construction of a plant began in November on reclaimed Fertilizer Works began production in September 1915,

Sumitomo Fertilizer Works

12 Sumitomo Chemical 100 Years

Packing fertilizer for shipment and several months before that, in April, the Osaka 19,000 tons in 1916 and almost doubled to 36,000 Office opened, putting a strategic sales system into tons in 1917, giving Sumitomo Fertilizer Works an 8% place. The original plan was to sell products through share of total national production. two routes. One was direct sales to industrial unions and agricultural associations, and the other was sales Reorganizing into a Corporation through licensed agents in each region. Eventually, In February 1921, Sumitomo General Head Office, however, licensed agencies that were selected from which had been operated as an individual proprietor- among the powerful and wealthy in each region ship, was restructured into Sumitomo Goshi Kaisha became the primary sales channels. (SGK). As a part of the restructuring, on June 1, 1925 Calcium superphosphate produced by Sumitomo Sumitomo Fertilizer Works was incorporated as The Fertilizer Works was first shipped on October 4, 1915, Sumitomo Fertilizer Works, Ltd., an independent entity. during World War I. With most countries of Europe The company became a 100% affiliate of SGK, run by at war, imports from the continent were disrupted, Masatsune Ogura, SGK managing director. Ten years creating a new demand for Japanese exports. The had passed since the original fertilizer plant started fertilizer industry prospered. With the wind at its back, business. It had 379 employees and was the third larg- Sumitomo Fertilizer Works built new manufacturing est company in the fertilizer industry, including sulfuric facilities. Production of calcium superphosphate was acid and nitric acid business, in Japan.

Fertilizer production (1915 to 1925) Business performance (1915 to 1929)

(Unit: tons) (%) (Unit: 1,000 yen) (Unit: 1,000 yen) 80,000 14 7,000 700 Net sales (Industrial chemicals) (left axis) Calcium superphosphate annual production (left axis) Net sales (Fertilizers) (left axis) Compound fertilizer annual production (left axis) 6,000 600 70,000 Profit/Loss (right axis) Calcium superphosphate market share (right axis) 12 Compound fertilizer market share (right axis) 5,000 500 60,000 10 4,000 400 50,000 8 3,000 300

40,000 2,000 200 6 30,000 1,000 100

4 0 0 20,000 1915 17 19 21 23 25 27 29 -100 2 10,000 -200 0 0 1915 17 19 21 23 25 -300

13 3 Going from a Fertilizer Manufacturer to a Chemical Company

To increase consumption of sulfuric acid, The Sumitomo Fertilizer Works, Ltd. went into the ammonium sulfate business in addition to producing calcium superphosphate. In conjunction with this, the company also began to produce ammonia. Nitric acid, methanol, formalin, and other industrial chemical businesses were also expanded, thus preparing the foundation for a shift from a fertilizer manufacturer to a chemical company.

View of entire works after the first-phase ammonia plant completion (the ammonia plant is on the right)

Introduction of Ammonia Synthesis Technology amount of sulfuric acid that would be produced also After the end of World War I, Japan was in an needed to be used effectively. extended recession in the 1920s and the fertilizer Production of ammonium sulfate was proposed industry was also in a slump, with a remarkably poor as a solution. Ammonium sulfate used twice as much market for calcium superphosphate. sulfuric acid as calcium superphosphate, and demand The Sumitomo Fertilizer Works, Ltd. initially went saw a steep increase in the 1920s. Technology to into the fertilizer business as a way to resolve the pol- produce ammonia was introduced from Nitrogen lution caused by sulfur dioxide gas emissions, but only Engineering Corp. of the United States, and in a small portion of the available sulfur from the Besshi December 1930, a plant with a daily capacity of 25 Copper Mine was being used, with poor market condi- tons was completed in Niihama in Ehime Prefecture. It tions making it difficult to increase production further. was the first ammonia synthesis plant in Japan to use Shisaka Island Smelting Works began to build facilities coke as raw material and the water gas shift reaction to turn sulfur dioxide it emitted into sulfuric acid and method. At the same time, an ammonium sulfate plant plans were to begin operations in 1929. The enormous with an annual production capacity of 40,000 tons was completed and went into full-scale operations Japan’s supply of ammonium sulfate (1912 to 1932) beginning in April 1931.

(Unit: 1,000 tons) The New York stock market crashed in October 1,000 1929 leading to the Great Depression. As the econo- Total imports my began to recover, there was increased demand for Production in Japan 800 concentrated sulfuric acid in rayon, celluloid, and dyestuff industries, so sulfuric acid plants needed to be

600 increased. Technology was introduced from Chemical Construction Corp. of the United States in January 1933. In March 1934, a sulfuric acid plant with a daily 400 capacity of 45 tons was built. One advantage of the production method was direct production of concen- 200 trated sulfuric acid, without causing acid mist that would result in pollution. 0 1912 15 18 21 24 27 30 In February 1934, a plant with a daily capacity Source: Data from Ministry of Agriculture and Forestry of 50 tons of nitric acid (50%) was completed, and

14 Sumitomo Chemical 100 Years

Warehouse for ammonium sulfate

1941, a plant was built with an annual capacity of 3,600 tons of methanol. Trial production of urea for medical use was begun in July 1933. In 1938, the production process was changed to a direct synthesis of ammonia and car- bon dioxide, and full-scale production began. In August of the same year, Sumitomo Chemical, in a fifty-fifty joint venture with Nippon Bakelite Co., Ltd., established Synthetic Resin Industry (now Sumitomo Completion ceremony for sulfuric acid plant Bakelite Co., Ltd.) to manufacture urea formalde- hyde resin. In other areas, a test plant for saltpeter the company entered the nitric acid business. This was set up in June 1939, and production facilities step was taken based on a strong request from the for isobutanol in December 1943. From December Army Ministry of Japan. The Army owned the process 1942, Sumitomo Chemical borrowed facilities of Kyoto which produced diluted nitric acid. The nitric acid was Imperial University’s Institute for Chemical Research put through extractive distillation using concentrated for test production of buna synthetic rubber. sulfuric acid to produce concentrated nitric acid. The Production of sulfuric acid and ammonia increased military needed nitric acid to make gunpowder and greatly going into the 1930s. The peak was in 1937, other items. before World War II. Production of fertilizers, chiefly ammonium sulfate, had also been on the increase, but Changing the Company Name to Sumitomo as wartime controls went into place, the proportion of Chemical Co., Ltd. fertilizer sales to Sumitomo Chemical total sales grad- In December 1933, management announced ually declined. In 1942, 37% of Sumitomo Chemical’s the goal to take the company out of the confines sales were in industrial chemicals. of the fertilizer manufacturing industry and bring it into the chemical industry. As a part of the process, the name of the company was changed in February 1934 from The Sumitomo Fertilizer Works, Ltd. to Sumitomo Chemical Co., Ltd. (hereinafter “Sumitomo Net sales and proportion of industrial chemicals (1925 to 1942)

Chemical”). Sales of industrial chemicals were already (Unit: 1,000 yen) (%) over 10% of company sales in 1930, and growth con- 55,000 Net sales (left axis) 50,000 35 tinued. The figure was 25% by 1935—it was already Proportion of industrial chemicals (right axis) beginning to look like a chemical company. In March 45,000 30 1934, it was the first Sumitomo manufacturing com- 40,000 pany to go public with stock. 35,000 25 In the years following, the list of chemicals 30,000 20 Sumitomo Chemical produced continued to grow. 25,000 15 Methanol and formalin were added in 1937. The tech- 20,000 nology came from Nitrogen Engineering Corp. In 15,000 10 June, a plant with a daily capacity of 5 tons of meth- 10,000 anol was completed, followed in September by one 5 5,000 that could produce 5.5 tons of formalin a day. They 0 0 went into full-scale operation in April 1938. In July 1925 27 29 31 33 35 37 39 41

15 4 Moving into Fine Chemicals

Japan Dyestuff Manufacturing Company was established in line with national policy to nurture the production of tar derivatives, such as synthetic dyestuffs, pharmaceuticals, and other chemicals. Sumitomo Chemical had expanded its business activities from fertilizer manufacturing to chemical production, and by merging with Japan Dyestuff Manufacturing, it moved into fine chemicals, including dyes, pharmaceuticals, and agrochemicals.

Japan Dyestuff Manufacturing Company Kasugade Works (Osaka)

Merging with Japan Dyestuff Manufacturing Outline of Japan Dyestuff Manufacturing Company

Company (Unit: 1,000 yen) Sumitomo Chemical’s fine chemicals busi- Japan Dyestuff Manufacturing Company Sumitomo Chemical ness began with a merger with Japan Dyestuff Capital 30,000 80,000 Manufacturing Company (JDMC) on July 1, 1944. Net sales 65,187 65,188 Net profit 2,998 7,122 JDMC was the largest dyestuff company in Japan and Dividend rate 8% 8% had capital of 30 million yen. Its plants included the Total assets 63,857 205,183 Kasugade Works (the current Osaka Works in Osaka), Total liabilities 16,482 108,617 which made mainly dyes and rubber chemicals, the Equity 47,375 96,566 Torishima Works (Osaka), devoted exclusively to man- Note: Net sales, net profit and dividend rate are for FY1943. Total assets, total liabilities and equity are as of the end of FY1943. Net sales of Japan Dyestuff Manufacturing Company is an ufacture of pharmaceutical products, and the Tsurusaki estimate. Works (currently Oita Works in Oita Prefecture) for raw materials and intermediate products for dyes, rubber was able to build up its technological capacity. By the chemical products and pharmaceuticals. end of 1926, JDMC had 242 dyes it had completed Japan’s demand for synthetic dyestuffs grew along research on, and seventy of them were on the market. with the nation’s textile industry but the supply of syn- More than thirty were on a par with products produced thetic dyestuffs was completely dependent on imports. overseas. These imports ground to a halt during World War I. By that time, however, pressure was mounting from With no tar derivatives produced in Japan such as syn- competition with European dyestuffs, and company thetic dyes and pharmaceuticals, the prices for dyes, operations required fortifying. As a result, corporate for example, averaged 20 to 30 times what they had auditor Katsutaro Inabata was installed as president. been before the war. Steps had to be taken to improve Inabata was a leading figure in the dye industry, with the situation. In 1915, a law was enacted to encourage experience in both importing and factory management. and nurture the production of tar derivatives, such He served as an auditor during the preparations to as synthetic dyestuffs and pharmaceuticals. The law establish JDMC, and continued in that capacity until promised ten years of subsidies to manufacturing com- he became president. Inabata shifted operations to a panies entering these fields. more active private-company style, and strengthened Japan Dyestuff Manufacturing Company was JDMC’s foundation by overhauling the sales system established based on this law, on February 25, 1916. and promoting research and development. Striving Construction of the Kasugade Works began in July to diversify business, in 1932, JDMC marketed the 1916, with a gradual move into production, beginning in vulcanization accelerator Soxinol and the antioxidant early 1918. Antigen, anticipating growing demand for automobile In October 1926, the subsidies from the govern- tires. In addition, JDMC moved into new business ment came to an end. During its first decade, JDMC fields including pharmaceutical products and synthetic

16 Sumitomo Chemical 100 Years

dyes. Although the Kasugade Works was a production base for fine chemicals, such as dyes and rubber chemicals, in the 1980s, it began a shift to research of some agrochemicals, of pharmaceuticals, and of product safety, and it currently plays a major role in research functions of Sumitomo Chemical. The Torishima Works was located about a kilometer northwest of the Kasugade Works. The all-modernized German-style factory began operations in September 1936 as a pharmaceutical chemicals factory, the first one in Japan to mass-produce synthetic products in an integrat- Interior of dyestuffs plant (Kasugade, Osaka) ed manner, beginning with raw materials and ending with the completed product. After the sweeteners, as well as rubber chemicals. In September merger with Sumitomo Chemical, the factory continued 1936, the Torishima Works in Osaka began producing to fulfill its role producing pharmaceutical chemicals pharmaceuticals, and in December 1939, the Tsurusaki and agrochemicals, but operations were finally halted Works in Oita began producing raw materials and inter- in April 1988, closing a chapter in history. mediate products for dyes, etc., setting the stage for an The main purpose of the Tsurusaki Works was to advance into fine chemicals. mass-produce intermediate products. Partial opera- At the request of JDMC, in 1934, Sumitomo tions began in December 1939, when production of Chemical began to manufacture synthesized nitric beta-naphthol, aniline, and other intermediate prod- acid and, in 1936, to supply tar distillates. By supply- ucts in mass production were moved to it from the ing these materials, the connection between the two Kasugade Works. In 1962, the factory began to pro- companies grew stronger. In addition, Sumitomo Goshi duce Sumithion, an organophosphorus insecticide. As owned stock in JDMC and participated in management well as making an advance into active pharmaceutical by dispatching executives. ingredients, the factory is currently playing a role as a In the years following, however, as the wartime production base for the life science chemical business. control during World War II took over, there were great In May 1964, the plant’s name was changed to the Oita shortages of raw materials, coal and electricity, and Works. JDMC operations became increasingly difficult. In The Ozaki Dyestuff Chemical Works in Okayama 1943, the number of dyes the dye industry produced Prefecture had originally planned to merge with JDMC. was cut to one-third, or 155 varieties, and the decision In August 1945, this plant was taken over by Sumitomo was made to organize 200 dye companies into mainly Chemical, thus becoming the Osaka Works Okayama six major corporations. In addition, in January 1944, Plant. In February 1988, it split off as an affiliate compa- JDMC failed to be designated a primary munitions ny to become Okayama Chemical, and in April 1992, it company, meaning it could no longer count on getting became the Okayama Plant of Sumika Fine Chemicals a share of raw or other materials. At this point, the deci- Co., Ltd. A merger with Sumitomo Chemical in July sion was made to merge with Sumitomo Chemical. 2004 re-established the facility as the Okayama Plant.

A Base for Fine Chemicals Sumitomo Chemical took over three JDMC plants: the Kasugade, Torishima and Tsurusaki Works. In July 1944, the three were brought under the umbrella of the newly established Osaka Works, which eventually became the core of the fine chemicals business, in charge of R&D and production of medical chemicals, agrochemicals, polymer additives, rubber chemicals, and other products. Since the Kasugade Works began operations, it had been producing dyes, intermediates and dyeing auxiliaries. Concerning dyes, the main raw materials were tar distillates from the Yahata Steel Works, which the plant made into intermediates and then into completed Japan Dyestuff Manufacturing Company Tsurusaki Works (Oita)

17 5 Post-war Recovery The manufacturing facilities in Ehime and in Osaka, including the light metal factory, were heavily damaged in the air raids of World War II, and were forced to halt operations after the war. Following all-out restoration efforts, the Ehime facilities were quickly restored and were producing ammonium sulfate by October 1945. The following month, the Osaka facilities began saccharin production.

View of Ehime facilities around 1947 (Source: The Mainichi Newspapers)

Dissolution of “zaibatsu” and Sumitomo Chemical 1. Dissolution of Sumitomo Honsha, Ltd. World War II ended on August 15, 1945. Sumitomo 2. Handover of stock owned by Sumitomo Honsha Chemical’s factories in Osaka were devastated in the to the specified government agency air raids and the Ehime factories were also seriously 3. Resignation of Honsha executives from posts in damaged. affiliated companies One of the pillars of postwar economic reform 4. Avoidance of “Sumitomo” in names of affiliated for Japan, as laid out by US General MacArthur companies and GHQ during the Occupation, was the disso- In keeping with this policy, Sumitomo Honsha lution of “zaibatsu,” the nation’s huge industrial ended its activities and was effectively dissolved conglomerates. These included Mitsui, Mitsubishi, on January 21, 1946, and Sumitomo Chemical Co., Sumitomo, Yasuda, and others. Each was encour- Ltd. changed its name to Nisshin Chemical Co., Ltd. aged to voluntarily dismantle their organizations. on February 26. In October of the same year, the The Sumitomo Honsha headquarters submitted its stock shares owned by Sumitomo Honsha were plan on November 4, 1945, and GHQ on November handed over to the Holding Company Liquidation 6 ordered the plan to be carried out. Sumitomo Commission, after which they were sold to employees Honsha announced the following prospectus on at market value. November 8. In December 1946, Nisshin Chemical was also designated a holding company, and in February 1948, it was ordered to reorganize in the form of multiple companies according to the Excessive Economic Power Deconcentration Law. In the meantime, in July 1947, GHQ had suggested separation into six companies. The Ehime factories, the Osaka factories, the aluminum division, the Wakayama Plant and the Okayama Plant would be independent companies and Nisshin Chemical Co., Ltd. would be in charge of the liquidation. In the years that followed, the relationship between the United States and the Union of Soviet Socialist Republics deteriorated and the Cold War continued. In the process, the United States adjusted its occupational policies toward Japan to hasten its economic recovery. Application of the Excessive Economic Power Deconcentration Law was relaxed, and Nisshin

Otto-style coke oven used to produce ammonia (Ehime) Chemical’s designation was changed in April 1949 so

18 Sumitomo Chemical 100 Years

um phosphate and potassium ammonium phosphate) was restored. Osaka Works started up anew with the production of saccharin, an artificial sweetener, in November 1945. Since GHQ did not allow the restoration of dye production, the recovery of direct dyes was delayed until January 1947. This was followed by completion of facilities for azo dyes in September and chrome dyes in April 1948. As policies on occupation shifted, in July 1950, dye production facilities with a monthly capacity of 110 tons were built and this completed the restoration of dye factories for the time being. As for other locations, after the war, the Tsurusaki

Coupling dyestuff plant (Kasugade, Osaka) Plant in Oita produced various intermediates for dyes on a small scale and, in February 1946, it began production that it was no longer subject to the terms of the act. of Antigen D, a rubber chemical. At the same time, the This settled the reorganization issues. Okayama Plant began production of sulfide dyes. The San Francisco Peace Treaty came into effect in April 1952, and in May, the government rescinded Incorporating Overseas Technology and Start the order abolishing all names and logos of former of Polyvinyl Chloride Business “zaibatsu.” On August 28, the company name was The incorporating of technology from abroad was changed back to Sumitomo Chemical Co., Ltd. enabled by the enactment in June 1950 of the laws governing foreign capital. The laws made it possible Plant Restoration to receive investment from abroad as well as to send Two days after the end of the war, the ammonia funds overseas for technological assistance. Sumitomo plant, the only factory in Ehime still operating at the Chemical immediately (July 1950) introduced urea tech- time, stopped all operations. Following all-out efforts nology from Chemical Construction Corp. of the United at restoration, in September 1945, ammonia produc- States, and in June 1952, built a urea plant with an tion started again, followed in October by production annual capacity of 12,000 tons. of ammonium sulfate using the sulfuric acid still in In February 1951, Sumitomo Chemical concluded stock and, in November, of calcium superphosphate. a contract with American Cyanamid Co. to produce In December, the sulfuric acid and nitric acid plants melamine resin, which was used in textiles, leather and were back in operation. In May 1946, plans for funda- paper processing, and a plant was built for this pur- mental repairs of facilities were put into action, begin- pose at the Osaka Works in October 1952. ning with a new water electrolysis plant. In October of One fruit of research and development was the com- that year, monthly production of ammonium sulfate mercialization of polyvinyl chloride business, based on reached 10,000 tons. By 1949, out of 17 plants in research that had begun in 1946. Intermediate tests Japan, Sumitomo Chemical’s plant had the highest began in January 1950 and, in July 1951, emulsion ammonium sulfate production, at 140,000 tons per polymerization production facilities in Ehime were com- year, and Sumitomo Chemical’s recovery in this indus- pleted, although the scale was small at 25 tons a month. trial segment was complete. In December 1949, full In April 1955, suspension polymerization was introduced operation was restored for mixed fertilizers and, in and in May 1957, monthly production capacity (including May 1951, production of chemical fertilizers (ammoni- emulsion polymerization products) reached 1,000 tons.

Production volumes for ammonium sulfate, sulfuric acid, and ammonia (1946 to 1952) Dye production (1944 to 1951)

Ammonium sulfate annual production (left axis) (Unit: 1,000 tons) (%) Sulfuric acid annual production (left axis) (Unit: 1,000 tons) (%) 250 20 3,000 30 Ammonia annual production (left axis) Dye annual production (left axis) Ammonium sulfate market share (right axis) 18 Dye market share (right axis) 2,500 25 200 16 14 2,000 20 150 12 10 1,500 15 100 8 1,000 10 6 50 4 500 5 2 0 0 0 0 1946 47 48 49 50 51 52 1944 45 46 47 48 49 50 51

19 6 Moving into the Agricultural Chemicals Business

Sumitomo Chemical’s Agricultural Chemicals Sector products include agrochemicals, such as insecticides, herbicides, and fungicides, as well as household insecticides. The first insecticidal product for household use was Pynamin (allethrin). In agrochemicals, the first product was parathion, an imported organophosphorus insecticide. Following parathion, Sumitomo Chemical developed Sumithion (fenitrothion) which replaced parathion and was very well accepted in the market. With good sales of household insecticides and highly safe agrochemicals, the Agricultural Chemicals Sector played an important role in the growth of fine chemicals business.

New Sumithion plant (Oita)

Start of the Business launched allethrin, named Pynamin, for mosquito The Agricultural Chemicals Sector, including the coil use. Unfortunately, Pynamin was not accepted household insecticides and agrochemicals, was one well due to its color and smell that were different of the businesses that Sumitomo Chemical newly from the natural ingredient pyrethrum. In 1954, once expanded into in the 1950s. The beginning of the mass-production of mosquito coils began, Pynamin household insecticides business was in 1953 with the was widely adapted as one of its active ingredients. In commercial production of allethrin. Allethrin is one 1955, a shortage of pyrethrum led to its sudden price of the “pyrethroids” which has a similar structure to increase, and Pynamin was getting recognized for its pyrethrin, the active insecticidal component in pyre- stable price compared with the natural ingredients. thrum (a variety of chrysanthemum traditionally used The first step into the agrochemical business was as an active ingredient for insecticides). Sumitomo taken in February 1953, when Sumitomo Chemical Chemical succeeded in synthesizing allethrin in began to import and sell parathion, an organophos- 1949. With manufacturing approval by the Ministry phorus insecticide, produced by American Cyanamid of Welfare in August 1953, Sumitomo Chemical Co. (ACC). Parathion was effective on rice-stem bor-

Pynamin plant (Torishima, Osaka) Parathion plant (Oita)

20 Sumitomo Chemical 100 Years

ers and other pests in rice, fruits and vegetables. moting the use of Sumithion in more than 50 coun- Sumitomo Chemical thus expected good demand tries. This resulted in a broadly expanded demand for this product in the Japanese market. For its pro- for Sumithion; from 1966 to 1969, yearly production duction in Japan, Sumitomo Chemical signed license capacity grew from 2,000 to 5,000 tons. agreements with ACC (ethyl parathion) and Bayer AG The next bestselling agrochemical to Sumithion (methyl parathion). In February 1954, an ACC ethyl was Sumicidin, which was launched overseas in April parathion production facility was built at the Tsurusaki 1976. Sumitomo Chemical was the first company in Works in Oita, followed in March 1955 by another the world to develop a pyrethroid without a cyclo- facility producing both methyl parathion and ethyl propane ring structure, and it had excellent effects parathion. on pests on cotton plants. It was a hit product, with Also in February 1954, Sumitomo Chemical start- exports achieving net sales of 13 billion yen in 1980. ed imports and sales of malathion, an organophos- In Japan, Sumitomo Chemical developed a combi- phorus insecticide from ACC. Production of the tech- nation product of organophosphorus insecticide and nical grade began in August 1955. Malathion was Sumicidin. In April 1983, Permathion and three other used as an insecticide for fruit trees and rice. Making products were launched for fruit and vegetable crops. use of malathion’s characteristics as low toxicity and In the field of fungicides, Sumitomo Chemical good efficacy on flies, mosquitoes and cockroaches, developed Sumilex and began selling it overseas in in 1958, premium malathion was developed targeting December 1976. The product was used to prevent insect-borne disease prevention and pest control in botrytis cinerea in vegetables, grapes and other fruits. livestock raising. It was a major product, and in 1981, sales volume in Japan and overseas countries exceeded 500 tons. Development of Major Agrochemical Products In the field of agrochemicals, Sumitomo Chemical Getting into Full-scale Household Insecticides not only began the production of in-licensed chemicals By 1962, natural pyrethrum in mosquito coils had in Japan but also developed a new organophospho- been replaced rus insecticide, Sumithion. In August 1959, Sumitomo by Pynamin Chemical applied for patents in Japan and overseas and its demand countries. Sumithion had excellent, long-lasting effects increased dra- and it was much less toxic than parathion. In November matically. When 1961, a 150-ton-per-month production facility of used in aerosol Sumithion was completed at the Tsurusaki Works, and products, though, Sumithion was launched in April 1962. its knock-down In the mid-1960s, the regulations on agrochemical efficacy was infe- safety in Japan became stricter, and in June 1971, the rior to pyrethrin, use of parathion was banned. It was at this point that the active ingre- Sumitomo Chemical began promoting a switchover dient in pyre- to Sumithion from parathion and pioneered its use for thrum. Thus a View of Misawa Works (Aomori) fruit, vegetable, and tea crops. Sumitomo Chemical fast-acting pyre- actively expanded into overseas markets as well. By throid compound the end of the 1960s, Sumitomo Chemical was pro- was developed and, in March 1965, launched under the name of Neo-pynamin. Subsequently, in 1973, Pynamin Forte was developed, with double efficacy to Net sales of Agricultural Chemicals Sector (1953 to 1985) Pynamin on pests. In 1976, Sumithrin was developed as killing agent against flies and mosquitoes, and in (Unit: Billions of yen) (%) 1989, Etoc was developed for wide use in mosquito 70 10 Net sales of Agricultural Chemicals Sector (left axis) coils, electric mosquito repellents, aerosols and other Proportion of Agricultural Chemicals Sector (right axis) 9 60 products. 8 To respond to expanded demand for pyrethroids, 50 7 the Misawa Construction Division was established in 6 March 1975 to build a new plant on an industrial com- 40 5 plex in Misawa City, Aomori Prefecture. Operations began in January 1978 and the first release of Neo- 30 4 pynamin and Pynamin Forte was realized in March. 3 20 The Misawa Works became the main factory of 2 pyrethroids for Sumitomo Chemical. It realizes new 10 1 technologies, such as practical application of optical

0 0 resolution, as well as launches many products newly 1953 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 introduced to the market and leads the growth of the Note: Proportion is to total Sumitomo Chemical sales household insecticides business.

21 7 Growth of the Pharmaceuticals Sector

Sumitomo Chemical’s Pharmaceuticals Sector began to expand through tie-ups and joint ventures with overseas corporations. The synthetic pharmaceutical technology of Sumitomo Chemical was demonstrated through the development of new production methods for indometacin and diazepam. New pharmaceuticals, such as neuropsychiatric and cardiovascular drugs as well as anti-inflammatory analgesics, were launched one after the other.

View of Ibaraki Plant (Osaka)

Postwar Restart sales of Upjohn products, some of them were manu- The Torishima Plant for pharmaceutical pro- factured by Sumitomo Chemical, to this joint venture duction was completely destroyed during the war. company. Sumitomo Chemical withdrew its invest- Reconstruction was energetically undertaken to ment in Japan Upjohn in December 1994. resume operations and full-scale restoration of opera- In July 1959, Sumitomo Chemical signed a con- tions was completed in 1949. The plant produced new tract with Imperial Chemical Industries Ltd. (ICI) of drugs, such as Anergen (an antihistamine), Tonopron the United Kingdom to import the antiseptic Hibitane. (an antihypertensive), and Uronamine (a urinary tract ICI and Sumitomo Chemical already had a strong antiseptic). relationship based on the introduction of polyethyl- In 1950, the Torishima Plant began to produce ene technology (1955), and this new tie-up took the para-aminosalicylic acid (PAS), an antituberculosis two companies also into the pharmaceutical field. In drug. Sumitomo Chemical launched methionine (a 1974, products from ICI reached 20% of Sumitomo synthetic essential amino acid) as a drug listed in Chemical’s pharmaceutical net sales. Sumitomo the official Pharmacopoeia of Japan, and began to Chemical and ICI in July 1974 further embarked supply it for use in multivitamin supplements in 1951. upon a joint venture, ICI Pharma Ltd., which they Sumitomo Chemical had also some OTC (over-the- financed in equal parts (600 million yen capital). counter) drugs such as Dan that was a popular cold In November 1993, ICI Pharma changed its name remedy containing antihistamine, and U-Von that to Zeneca Yakuhin and, in October 2000, merged was an anti-aging/nutritional drug. In May of 1958, with AstraZeneca K.K. (20% owned by Sumitomo Tespamin, an antitumor medication, was produced Chemical), the Japanese affiliate of AstraZeneca of using advanced technology that drew attention over- the United Kingdom. Subsequently in 2014, Sumitomo seas and Sumitomo Chemical’s first international Chemical sold its 20% shareholding of the joint ven- licensing in the pharmaceuticals area was made to ture to AstraZeneca. American Cyanamid Co. in 1960. Nihon Medi-Physics Co., Ltd., a joint venture between Sumitomo Chemical and Medi-Physics Inc. Joint Ventures with Overseas Corporations of the United States, was established in March 1973, Sumitomo Chemical’s first joint venture with an to market diagnostic drugs that use radioisotopes overseas corporation came in June of 1959 when the (capital 200 million yen, 45% owned by Sumitomo company established Japan Upjohn Ltd. with Upjohn Chemical). Medi-Physics’ shares were taken over by Corp. of the United States. Sumitomo Chemical took Nippon Roche in March 1975. In December 1994, a 45% stake in the new company’s capital stock, 20 Nippon Roche terminated its participation and the million yen. Before that, in 1953, Sumitomo Chemical new capital investor became Amersham International formed a tie-up with Upjohn to import cortisone (one plc of the United Kingdom. The latter was acquired by of the corticosteroids) products. After Japan Upjohn GE Healthcare UK Limited, which took over the shares was established, Sumitomo Chemical moved the of Nihon Medi-Physics in April 2004. (Since October

22 Sumitomo Chemical 100 Years

1996, Sumitomo Chemical has owned 50% of the were developed that evidenced the value of Sumitomo shares.) Chemical’s drug synthesis technologies. One was the non-steroidal anti-inflammatory drug Inteban New Business Division for Pharmaceuticals (indometacin) launched in March 1967 and the other Sumitomo Chemical established a business divi- was the anxiolytic Serenzin (diazepam) launched in sion for pharmaceuticals in July 1961 with the aim November 1968. of modernizing the field. Until then, the business Indometacin was developed by Merck & Co., Inc. had been divided among department managers for of the United States and globally accepted as a treat- administration, manufacturing, research, etc. located ment for rheumatoid arthritis. Sumitomo Chemical at the head office, the Tokyo branch office and the was able to develop its own production method for Osaka Works, but the creation of the new division the drug, achieving superior cost performance. When made it possible to integrate the pharmaceutical busi- Merck & Co. realized Sumitomo Chemical’s revolu- ness under one division head. tionary production methods of indometacin, Merck & The Japanese pharmaceutical industry enjoyed Co. asked and was granted a license to use the pat- brisk demand, mainly owing to the introduction of ented process with the payment of US$ 3 million (1.08 Japan’s National Health Insurance scheme in April billion yen) in May 1967. 1961 and health care coverage for the country Sumitomo Chemical also developed a new excel- increased dramatically. Between 1960 and 1963, lent production method for diazepam, one of the ben- Sumitomo Chemical experienced rapid growth in zodiazepines, and was able to export this technology. pharmaceuticals with percentage sales gains in the In September 1970, the Swiss company F. Hoffmann- 20s and the 30s. The range of products also expand- La Roche AG paid US$1.6 million (570 million yen) for ed and diversified. To keep up with its burgeoning permission to use the patent to produce benzodiaze- business, Sumitomo Chemical increased its produc- pine compounds. tion capacity by constructing the Ibaraki Plant (Ibaraki City, Osaka) in 1962. Robust Sales Growth Sumitomo Chemical conducted R&D and the pro- Pharmaceutical sales were flat in the late 1970s, duction of pharmaceutical products, and the market- around 30 billion yen, but increased dramatically from ing was assigned to Inabata & Co., Ltd. (exclusive dis- the beginning of the 1980s. Sales reached 53.1 billion tributor). In order to attain further efficiencies in mar- yen in 1983, meaning sales were 41 times larger than ket needs assessment, sales planning and inventory that in 1955, the beginning of Japan’s rapid economic management, in February 1967, Sumitomo Chemical growth era. and Inabata integrated sales administration and inven- Rapid growth in the 1980s can be attributed to the tory control, making it possible for both companies success of Sumitomo Chemical’s original research to coordinate more effectively and for Sumitomo and development: psychoneurologic drugs, cardio- Chemical to undertake rational production planning. vascular medications, and anti-inflammatory analgesics. Specifically, in 1979, Abilit, an antipsychotic drug Developing Methods to Produce Indometacin to treat schizophrenia, was launched. It was followed and Diazepam by Inteban ointment (a transdermal non-steroidal During the latter half of the 1960s, two products anti-inflammatory drug) in 1980, the anxiolytic Erispan and the lipid-lowering drug Lipoclin in 1981.

Net sales of Pharmaceuticals Sector (1950 to 1984)

(Unit: Billions of yen) (%) 60 9 Net sales of Pharmaceuticals Sector (left axis) Proportion of Pharmaceuticals Sector (right axis) 8 50 7

40 6 Advertisements for Dan and U-VON 5 30 4

20 3

2 10 1

0 0 1950 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84

Higashi Yodogawa Plant in Osaka for formulation (1947-1962) Note: Proportion is to total Sumitomo Chemical sales

23 8 Entering the Field of Petrochemicals

In 1958, Sumitomo Chemical completed one of the first ethylene plants in Japan—Ehime Prefecture—thus advancing into the field of petrochemicals. This business was further expanded with a subsequent plant in Chiba Prefecture that was capable of large-scale ethylene production and the launch of a wide range of derivative products.

Ethylene plant (Ehime)

Production of Ethylene and Derivatives The first petrochemical products were produced Japan ethylene production (1958 to 1973) in the United States in 1920. Japan’s petrochemical (Unit: 1,000 tons) industry got its start thirty-seven years later, in 1957. 4,500 4,000 By this time, Western countries had enormous pet- Ethylene annual production rochemical industries in place. Japan’s Ministry of 3,500 International Trade and Industry took the lead in mak- 3,000 2,500 ing plans to catch up as quickly as possible. 2,000 In the first phase of Sumitomo Chemical’s petro- 1,500 chemical business plan, the primary objective was the 1,000 production of polyethylene. In July 1955, Sumitomo 500 Chemical contracted with Imperial Chemical Industries 0 Ltd. (ICI) of the United Kingdom to introduce the tech- 1958 61 64 67 70 73 nology to produce low-density polyethylene. For eth- Source: A booklet issued by Japan Petrochemical Industry Association ylene, the technology of Stone & Webster Engineering Corp. of the United States was introduced in March capacity had increased to 30,000 tons. A joint venture 1956. In 1958, plants were completed in Ehime with the US Rubber Company in August 1963 resulted Prefecture. The ethylene plant had an annual capac- in Sumitomo Naugatuck Co., Ltd. (capital 955 million ity of 12,000 tons, and the polyethylene plant had a yen, 51% owned by Sumitomo Chemical). This took capacity of 11,000 tons. Sumitomo Chemical into the field of acrylonitrile buta- During the second phase of Sumitomo Chemical’s diene styrene (ABS) resin. petrochemical business plan, annual ethylene pro- Acrylonitrile is used to make synthetic fiber, and in duction capacity reached 87,000 tons (August 1964) January 1959, a plant to produce acrylonitrile using by capacity expansion. Additionally, an ethylene plant acetylene process was completed in Ehime. Later, with an annual capacity of 40,000 tons was built in Sumitomo Chemical switched to the Sohio process, Ehime in January 1966, and this boosted polyethylene which uses propylene and ammonia as raw materials, production capacity to 100,000 tons a year. when a plant with an annual capacity of 15,000 tons For propylene derivatives, Sumitomo Chemical was completed in September 1964. In September introduced the polypropylene technology of 1963, aiming to produce caprolactam (an intermediate Montecatini of Italy, and in November 1962, facilities of nylon), Sumitomo Chemical formed Japan Lactam with an annual capacity of 6,500 tons were com- Ltd. (capital 900 million yen) with Teijin Ltd. and Kureha pleted. As demand for films and molded products Spinning Co., all three contributing equally. In April increased, by April 1967, polypropylene production 1965, a plant was built that could produce 18,000 tons

24 Sumitomo Chemical 100 Years

Sumitomo Chiba Chemical’s production capacity of polyethylene increased to 130,000 tons. Production capacity of polypropylene increased to 90,000 tons by the end of 1970. Using ethylene instead of acetylene to make polyvinyl chloride, the process created a brisk demand for ethylene. Polymerization facilities constructed in October 1967 had a production capacity of 20,000 tons of polyvinyl chloride a year. Additional facilities built in August 1970 had a production capacity of 30,000 tons, for a total 50,000-ton capacity. In December 1969, Sumitomo Chemical, Denki Kagaku Kogyo (DENKA), and three other companies established Chiba VCM Co., Ltd. (capital 300 Polyethylene plant (Ehime) million yen, with Sumitomo Chemical owning 28%). In January 1971, the company constructed a plant with an a year. Production of the by-product ammonium sulfate annual capacity of 160,000 tons of vinyl chloride mono- came to over 52,000 tons a year, which led to a reduc- mer. The product was provided to its shareholding com- tion in the total costs of production of ammonium sul- panies. fate for Sumitomo Chemical. By March 1968, produc- In October 1968, facilities to produce styrene mon- tion capacity of caprolactam was increased to 40,000 omer were completed. To supply the facilities with the tons a year and Sumitomo Chemical, at the same time, necessary raw material, benzene, a BTX plant was built in became self-sufficient in cyclohexane, the raw material September of the same year. for caprolactam, with the construction of a plant for More plants were added for new fields: EPDM (eth- cyclohexane. Ahead of this event, in May 1967, a new ylene propylene diene methylene linkage) in November BTX (benzene, toluene, and xylene) plant in Ehime 1969, SBR (styrene-butadiene rubber) in August 1971, was added to produce raw materials for cyclohexane, and EVA (ethylene-vinyl acetate) emulsion in January alkylbenzene for synthetic detergent, TDI—the material 1970. used to make urethane—and other products. In the petrochemical industry, new facilities with large capacities were built to increase global com- A Petrochemical Complex in Chiba petitiveness. To this end, Sumitomo Chemical and When the new phase of the government’s petro- nine other companies established Higashi-Nihon chemical plan began in 1965, approval standards set Methanol Co. in September 1968 (capital 500 mil- by the government required new ethylene production lion yen, Sumitomo Chemical 50% shareholder). In plants to have production capacity of at least 100,000 November of that same year, Sumitomo Chemical, tons a year. In April 1965, Sumitomo Chemical submitted Seitetsu Kagaku Co., Ltd., Showa Denko K.K., and plans for a petrochemical complex in Chiba that includ- Nissan Chemical Industries, Ltd. established Nihon ed an ethylene plant with annual production capacity of Ammonia Co., Ltd. (capital 1 billion yen, Sumitomo 120,000 tons. With the aim of achieving efficient oper- Chemical 28% shareholder). In April 1971, the compa- ations at the new plant, Sumitomo Chemical decided it ny built the largest ammonia plant in the world, with a should be operated as a separate company. Sumitomo capacity of 1,550 tons a day. Chiba Chemical Co., Ltd. (capital 1 billion yen) was established in November 1965 as a 100% subsidiary company. (It merged with Sumitomo Chemical in January 1975.) Toward the planned annual production capacity of ethylene of 120,000 tons, Sumitomo Chemical in April 1967 constructed plants with a total annual capacity of 70,000 tons and by November 1968, all of the facilities were completed, enabling the targeted production capacity of 120,000 tons. Meanwhile, the world was experiencing a petrochem- Start-up ceremony for ethylene plant in Chiba ical boom. New ethylene plants were planned or constructed, most on a large scale of 300,000 to 500,000 tons. In June 1967, government approval standards for new ethylene plant capacity increased to 300,000 tons. In January 1970, Sumitomo Chiba Chemical and Tonen Sekiyu Kagaku, on a rotating investment basis following the administrative guidance of the government, built an ethylene plant in Chiba that had an annual capacity of 300,000 tons. This gave Sumitomo Chiba Chemical a total capacity of 420,000 tons. When the capacity of the Ehime facilities was added, the annual capacity was 531,500 tons.

Looking at the main derivatives, by January 1972, BTX plant and styrene monomer plant (Chiba)

25 9 Dealing with the Oil Crises

In the 1970s, the Japanese petrochemical industry was hit hard by two oil crises. In 1983, Sumitomo Chemical ceased the production of most petrochemicals in the Ehime Works and relo- cated the production to the Chiba Works, where Sumitomo Chemical had newer and more efficient facilities. At the same time, Sumitomo Chemical disposed of redundant facilities, based on the Designated Industries Structural Revision Extraordinary Measures Law (Industry Restructuring Law). It was a difficult period of restructuring and Sumitomo Chemical did everything it could to survive.

Chiba Works

Measures for Business Improvement stable growth, 4 to 5% increases, from 1976 to 1979. In October 1973 when the first oil crisis hit, Japan was Then the second oil crisis hit in January 1979. In April in the most severe position of all the developed countries 1980, the posted price of crude oil had leaped to US$28 a because it depended on the Middle East for 82% of its barrel. Sumitomo Chemical had just succeeded in recov- petroleum. Before the crisis, the market price of crude oil ering from the impact of the first crisis when, in FY 1981, it was US$2.63 a barrel. By January 1974, it was four times once again experienced weakened profitability and, in FY as expensive at US$10.46. Consumer prices increased by 1982 registered large losses. 21.8% year-on-year. Costs rose for almost all industries. In the midst of the recession, Japanese manufacturing The situation was serious. Beginning in the fall of 1974, industries were doing their best to conserve energy and there was a rapid increase in corporate bankruptcies, cut costs. Up to the oil crises, the manufacturing indus- temporary layoffs, workforce reductions, and salary cuts. try had invested heavily in new facilities to meet rising Japan’s petrochemical industry had its era of rapid growth demand. When demand cooled off, industries were faced thanks to the low price of petroleum, and now it faced an with an excess of production facilities. Materials indus- unprecedented emergency situation as profits deteriorated. tries, etc., dependent on large amounts of energy, found it In 1975, Sumitomo Chemical’s profitability was weakened difficult to restructure with the remainder of Japan’s econ- as high cost of petroleum necessitated additional operating omy. While the Japanese economy experienced a gentle funds, resulting in higher financing charges that burdened recovery, beginning in 1975, many of the energy-depend- earnings. ent industries were unable to keep pace. In May 1978, In the midst of the crisis, Japanese manufacturers did the Temporary Measures for Stabilization of Specified their best to save energy and cut operating costs. In 1974, Depressed Industries Law went into effect to allow indus- Japan’s GDP recorded negative growth of 0.6% but it tries suffering from the recession to recover by disposing recovered to 2.9% in 1975, and followed with a period of of facilities and forming “rationalization cartels.” Some of the industries that were included were open-arc furnaces (steel making), aluminum smelting, synthetic fiber, and Growth of Japanese economy and import price of crude oil (CIF) (1972 to 1984) shipbuilding. In addition, in May of 1983, the Designated Industries Structural Revision Extraordinary Measures (%) (1,000 yen/k ) Law (Industry Restructuring Law) was introduced and 30 60 Import price of crude oil (right axis) applied to industries such as electric furnaces (steel mak- Nominal growth rate (left axis) 25 Real growth rate (left axis) 50 ing), aluminum smelting, synthetic fiber manufacturing, chemical fertilizer manufacturing, petrochemical pro- 20 40 duction, and others. Consequently, it affected Sumitomo

15 30 Chemical’s aluminum smelting, chemical fertilizer, and petrochemical businesses. 10 20 In September 1977, Sumitomo Chemical formulated its own measures for total improvement of business, and 5 10 began to work on the following five areas. 0 0 (1) Reorganization of business fields and consolidation 1972 75 78 81 84 of facilities -5 (2) Streamlining of organization Source: 1999-2000 Yearbook of Energy Sources, supervised by Agency (3) Cutting of labor costs for Natural Resources and Energy Long-term Economic Statistics (1999), Cabinet Office (4) Energy conservation

26 Sumitomo Chemical 100 Years

(5) Rationalization of research divisions 1983, the Ehime Works had already stopped production Of these, (1) had already been accomplished in July of ethylene, its derivatives and BTX in accordance with the 1976 for the aluminum business by forming a separate petrochemical business restructuring and rationalization company, so the focus this time was on the petrochemical plan of October 1981. After this, the production of ethylene field. As for (3), from 1975 to 1983, personnel costs were and its main derivatives was concentrated at the Chiba cut in four phases of restructuring, which entailed dis- Works. patching employees to other companies, leaving positions As for polyvinyl chloride, in October 1981, agreements of retired employees unfilled, and controlling the number were made among seventeen companies to form four of new hires. Unfortunately, these large-scale personnel groups, with each establishing a joint-sales company reduction efforts were not sufficient, and from November to handle its sales. Approval of the Japan Fair Trade 1982 to February 1983, an early retirement program had Commission for this arrangement was received in March to be implemented. The result was that the workforce 1982, and Sumitomo Chemical, Kureha Chemical Industry was reduced by 7,400 employees. 15,210 employees Co., Ltd., Sun Arrow Chemical Co. and Zeon Corporation (not including those assigned to other companies) at the established Dai-Ichi Vinyl Sales Corporation (capital 90 end of 1975 were reduced to 7,803 by the end of 1983. million yen, 25% owned by Sumitomo Chemical). In addi- Concerning (4), energy conservation plans were pursued tion, in June 1983, under the Industry Restructuring Law, in three stages from 1977 to 1984 and an aggregate total excess facilities were scrapped. Of the reactor volume of of 44% reduction in energy was achieved, compared with 686m3 owned by Sumitomo Chemical, 193m3 at the Ehime the enegy consumption volume of 1976. Works were scrapped. In June 1983, polyolefin (polyethylene and polypropyl- Concentrating Petrochemical Manufacturing ene) was also specified under the Industry Restructuring in Chiba and Continued Rationalization Law. Seventeen companies producing polyolefin set up With the aim of integrating the petrochemical busi- four joint-sales companies. Sumitomo Chemical, with ness, Sumitomo Chemical merged with Sumitomo Chiba Ube Industries, Ltd., Toyo Soda Manufacturing Co., Chemical Co., Ltd. and launched the Chiba Works in Ltd., Chisso Corporation, Tokuyama Soda Co., Ltd., and January 1975. Since the policy for business restructuring Nissan Maruzen Polyethylene Co., Ltd. established Union was “establishing the optimal manufacturing system,” pro- Polymer Co., Ltd. (capital 400 million yen, 18% owned duction was concentrated at the Chiba Works. by Sumitomo Chemical) in June 1983. The scrapping of Specifically, along with the closing of the Chiba No. 1 excess facilities continued. Sumitomo Chemical disposed Ethylene Plant (October 1976, annual production capacity of 96,000 tons of polyethylene facilities at the Ehime of 130,000 tons), Sumitomo Chemical also closed the No. Works and 26,000 tons at the Chiba Works. 2 Ethylene Plant at the Ehime Works (annual production Concerning ammonia and methanol, Japanese prod- capacity of 65,000 tons) because output was small and ucts, which depended on naphtha and other petrole- the facilities were aging. On the other hand, in December um-based materials, lost their competitiveness both in 1977, Sumitomo Chemical decided to increase the pro- Japan and abroad to foreign products that used low- duction capacity of the Chiba No. 2 Ethylene Plant from priced natural gas as a raw material. In 1976, operations at 300,000 tons a year to 330,000 tons. As for polyethylene, Nihon Ammonia Co., Ltd. were stopped and the company of the three production lines at the Ehime Works, No. 1 was liquidated in December 1981. Ammonia production and No. 3 plants stopped producing a total of 40,000 tons was discontinued at the Ehime Works in November 1985, and as a result, total production capacity at the Chiba and Higashi-Nihon Methanol Co. Ltd. was liquidated in and Ehime Works was reduced to a total of 205,000 tons. June 1984. Additional capacity for ethylene at the Chiba Works was completed in November 1978, and the facilities at the Facility processing according to Industrial Restructuring Law (1983)

Ehime Works ceased production in April 1979. (unit: 1,000 tons) In June 1983, disposing of the ethylene facilities All-Japan Sumitomo Chemical according to the Industry Restructuring Law was decided, Facility capacity Capacity Facility capacity Capacity and all Sumitomo Chemical facilities at the Ehime Works eliminated eliminated and part of the facilities at the Chiba Works, a total of Ethylene 6,347 2,031 569 224 3 3 224,400 tons, were planned to be scrapped. In January Polyvinyl chloride 2,010 450 686m 193m Polyethylene 2,755 850 286 122 Note: Polypropylene was excluded from capacity elimination

Higashi-Nihon Methanol Co., Ltd. (Chiba) Nihon Ammonia Co., Ltd. (Chiba)

27 10 Rise and Decline of Aluminum Business

The production of aluminum increased during the wartime years when there was military demand. Thereafter, the business expanded greatly during the period of rapid economic growth in Japan thanks to private demand. The two oil crises, however, dealt the aluminum industry a fatal blow because they led to a sharp rise in the price of electricity. Sumitomo Aluminium Smelting Co., Ltd. stopped all business activity in 1986. After that, Sumitomo Chemical began to import aluminum ingots produced by overseas projects in which Sumitomo Chemical participated and to function as an aluminum supplier, actively developing business in fine alumina, high-purity alumina, and high-purity aluminum. Even today, the businesses stemming from aluminum form one of the pillars of the Basic Chemicals Sector.

Soederberg-style electrolytic furnaces (Ehime)

Start of Aluminum Business January 1939, production capacity had increased to Sumitomo Chemical first entered the aluminum 4,500 tons a year. business in 1932, when Sumitomo Goshi Kaisha com- Military demand for aluminum increased, including missioned Sumitomo Chemical to conduct a trial a need for airplane production. Sumitomo Aluminium production of alumina, the main raw material for alu- Smelting built a second factory in March 1940 with minum. The objective was to confirm the technology an annual production capacity of 8,000 tons, and a required to make alumina from alunite. Based on third one in September 1942 with a capacity of 10,000 these trials, Sumitomo Chemical developed its own tons. To drastically reform the system of producing alumina manufacturing method. aluminum from bauxite in an integrated manner, the In June 1934, Sumitomo Goshi Kaisha and Asada managing of the operation of Sumitomo Aluminium Alum Manufacturing Goshi Kaisha jointly established Smelting was assigned to Sumitomo Chemical in June Sumitomo Aluminium Smelting Co., Ltd. (capital 10 1944. million yen, 75% owned by Sumitomo). Located in Ehime, Sumitomo Aluminium Smelting began by building a first-stage plant that could produce 1,500 tons a year. Operations began in February 1936. Along with alumina, Sumitomo Chemical aimed to supply cryolite used for aluminum smelting, and in June 1936, it completed a cryolite plant that could produce 300 tons a year. The alumina made from alunite, however, was of poor quality and the cost was high. In June 1937, Sumitomo Chemical switched to the Bayer process, which made alumina from bauxite. In February 1938, production began on a scale of five tons a day. In Alumina deposition tanks (Ehime)

28 Sumitomo Chemical 100 Years

Net sales of aluminum division

(Unit: Billions of yen) (%) 120 25 Net sales of aluminum division (left axis) 100 Proportion of aluminum division (right axis) 20

80 15

60 10 40 Note: Proportion is to total Sumitomo 5 Chemical sales. 20 As of Nov. 1976, the business was transferred to Sumitomo Aluminium 0 0 Smelting Co., Ltd. 1950 52 54 56 58 60 62 64 66 68 70 72 74 76

Business Expansion During the Period of Japan’s land adjoining that of Sumitomo Light Metal Industries Rapid Economic Growth to supply it with aluminum that had been smelted. The After the war, the production of aluminum did not Nagoya Works, with a first-phase capacity of 15,000 start until July 1948, two months after bauxite-to-alu- tons per year, began production in August 1961. All of mina production finally resumed in May 1948. In August the facilities were completed in December 1964, pro- 1949, plans to rebuild facilities were approved and, viding an annual production capacity of 46,500 tons. in November, Sumitomo Chemical acquired all of the Subsequent plans were for an aluminum plant with facilities of Sumitomo Aluminium Smelting. a 68,000-ton annual capacity to be built in Isoura in In 1950, after war broke out in Korea, it brought Ehime Prefecture. In June 1967, the first-phase facil- about a temporary economic boom in Japan, which ities were built with an annual production capacity increased the production of aluminum. Additionally of 17,000 tons. All of the Isoura Plant facilities were around that time, new aluminum applications, such as completed in November 1969. They were capable materials for buildings, trains and ships, were devel- of producing 76,000 tons a year. The result was that oped and they gradually increased the demand for Sumitomo Chemical’s annual production capacity had aluminum in Japan. Beginning in the latter half of the expanded to 156,000 tons, and Sumitomo Chemical 1950s, the period of Japan’s rapid economic growth was still struggling to meet demand. resulted in dramatic leaps forward in the aluminum To keep pace with demand, Sumitomo Chemical business. From 1955 to 1970, annual net sales of alu- obtained 330,000m2 of land in the Toyama-shinko minum surged from 2.7 billion yen to 49.8 billion yen, Seaside Industrial Zone in September 1968 to build a an average annual growth of 21.4%. plant that could produce 168,000 tons of aluminum a In July 1961, a plant was built in Nagoya (Nagoya year. In February 1970, the first half of the first-phase Works) at the request of Sumitomo Metal Industries, facilities of the Toyama Works began operation at Ltd. Sumitomo Light Metal Industries, Ltd. acquired 28,000 tons a year. In October 1973, 180,000-ton-a- the aluminum rolling division of Sumitomo Metal year facilities were completed. Industries, so Sumitomo Chemical’s plant was built on To prepare for growing demand, in February 1970, the decision was made to construct a plant with an annual capacity of 300,000 tons in Toyo in Ehime Prefecture. In March 1975, the first half of the first- phase facilities with an annual capacity of 50,000 tons was completed. A prominent feature of this factory was the world’s largest pre-baked-style electrolytic furnace, operating on 175,000 amperes. The furnace was developed by Sumitomo Chemical. The second half of the first-phase facilities was completed in April 1976, providing an annual capacity of 100,000 tons in total. The plant was operated by Sumitomo Toyo Aluminium Smelting Co., Ltd. (capital 3 billion yen, 100% owned by Sumitomo Chemical), established in Looking at the alumina plant from the bauxite storage area (Ehime)

29 Specified Depressed Industries Law, and Sumitomo Aluminium Smelting drastically reduced production. In January 1979, after the second oil crisis, a stabilization plan was announced based on the Temporary Measures for Stabilization of Specified Depressed Industries Law, and aluminum electrolytic furnaces with total production capacity of 530,000 tons were decided to be scrapped. In March 1979, Sumitomo Aluminium Smelting closed all of its Nagoya Works facilities and part of its facilities at the Toyama Works. In January 1981, Sumitomo Aluminium Smelting merged with Sumitomo Toyo Aluminium Smelting. The new company, with the name Sumitomo Aluminium Sumitomo Toyo Aluminium Smelting Co., Ltd. Smelting Co., Ltd., had capital of 18 billion yen (50% owned by Sumitomo Chemical). August 1974. The strained circumstances of the aluminum smelting industry continued. In March 1982, the oper- End of Domestic Smelting After Oil Crises ations at the Isoura Plant were discontinued, fol- Sharp rises in the price of electricity due to the oil lowed by the Toyo Plant (the former Sumitomo Toyo crises had a direct impact on the cost of producing Aluminium Smelting) in December 1984. In July 1986, aluminum, which was heavily dependent on electricity Sumitomo Chemical decided to withdraw from all for its production. The Japanese aluminum smelting domestic aluminum smelting and in October stopped industry lost international competitiveness, turning it the operations at the Toyama Plant. This was the last from a growth industry into a depressed industry with plant operated by Sumitomo Aluminium Smelting, and an excess of inventory and facilities. the company was liquidated in December 1986. Operation of the Toyama Works third-phase facilities (completed in October 1973) was postponed. The Asahan Project and Imports of Aluminum Sumitomo Chemical reduced aluminum production from Overseas Projects by 25% in November 1974 and lowered the operating Except for one aluminum smelting company run on rate to 65% in February 1975. The major portion of the hydroelectricity it generated itself, all aluminum smelt- facilities of Sumitomo Toyo Aluminium Smelting, com- ing in Japan had disappeared by 1987. In contrast, pleted in March 1975, failed to even begin production. concerning overseas production, Sumitomo Chemical In the midst of this difficult environment, Sumitomo Chemical separated its aluminum business into an independent entity, establishing Sumitomo Aluminium Smelting Co., Ltd. in July 1976. The combined production capacity of Sumitomo Aluminium Smelting and Sumitomo Toyo Aluminium Smelting was 414,000 tons a year, the largest in Japan and the seventh highest in the world. Japanese aluminum production reached a record high in 1977, and began its decline in 1978 as cheap imports flooded the market. In 1978, the aluminum industry created its first rationalization cartel according to the Temporary Measures for Stabilization of Opening ceremony for P.T. Indonesia Asahan Aluminium

Sumitomo Chemical’s aluminum smelting operations (1979 to 1986)

(Unit: tons) Mar. 1979 Mar. 1982 Dec. 1984 Oct. 1986 Facilities not in operation Remaining capacity Facilities not in operation Remaining capacity Facilities not in operation Remaining capacity Facilities not in operation Remaining capacity Nagoya Works 52,796 0 Isoura Plant 78,980 78,980 0 Toyo Plant 98,712 98,712 98,712 0 Toyama Works 59,227 118,454 35,537 82,917 82,917 82,917 0 Total 112,023 296,146 114,517 181,629 98,712 82,917 82,917 0 Note: The Toyo Plant was Sumitomo Toyo Aluminium Smelting Co., Ltd. until Jan. 1981.

30 Sumitomo Chemical 100 Years

Sumitomo Aluminium Smelting Co., Ltd. production in Japan and volume imported (1975 to 1986).

(right axis) (Unit: 1,000 tons)Production in Japan NZAS (Unit: 1,000 tons) (left axis) Venezuela 350 60 Total imports Asahan (left axis) Boyne 300 50

250 40

200 30 150

20 100

10 50

0 0 1975 77 79 81 83 85

Meanwhile, the NZAS Project in New Zealand

Sigura-gura Dam power generator, P.T. Indonesia Asahan Aluminium was led by Comalco Industries Pty. Ltd. of Australia. In February 1969, New Zealand Aluminium Smelters had success in overseas aluminum smelting projects, Ltd. (NZAS) was established. Sumitomo Chemical beginning with the Asahan Project in Indonesia. provided 25% of the investment. In April 1971, the The Asahan Project was designed to utilize the first-phase plant with a 75,000-ton annual capacity rich hydroelectric resources in North Sumatra, and was completed. Aluminum ingots were first accept- the government of Indonesia took the lead in promoted by Sumitomo Chemical in January 1972. Since ing the construction of an aluminum smelting factory business was accepted on a cost basis, it was partic- that could produce 225,000 tons a year. Sumitomo ularly competitive among aluminum produced in over- Chemical decided to get involved with this project in seas projects. In July 1996, annual capacity reached 1969 and promoted it as the lead underwriter of the 313,000 tons (of which 64,600 tons were allotted to Japanese side. In 1975, the Japanese government Sumitomo Chemical). agreed to provide loans, making it a national project Another national project was the Amazon undertak- on both sides. The first-phase facilities had an annual ing, for which the Brazilian government began seeking capacity of 75,000 tons and were completed in January participants in August 1973. Japan’s participation 1982. In November 1984, a ceremony was held to was funded by the Overseas Economic Cooperation commemorate the completion of all of the facilities. Fund. The resources of the Amazon River Basin were to be used to operate an alumina plant with an annual capacity of 800,000 tons and an aluminum plant with a 320,000-ton capacity. In the end, Japanese participants withdrew from the alumina plant plan. The first phase of the aluminum plant (annual capacity 160,000 tons) began operations in July 1985, with the second-phase plant (same capacity) starting in 1990. Participation in other international projects included a joint venture for aluminum smelting in the Guayana region of Venezuela in December 1973 (annual capacity 280,000 tons, Sumitomo Chemical investment 4%) and an aluminum smelting joint venture on Australia’s Boyne Island (annual capacity 206,800 tons, Sumitomo Chemical investment 4.5%) with Comalco Limited in April 1978. Operation at the former began in February 1978 and for the latter in February 1982.

New Zealand Aluminium Smelters (NZAS) plant

31 11 Construction of Singapore Petrochemical Complex

The Singapore petrochemical project was Sumitomo Chemical’s first overseas project in petrochemicals. It was of great significance for both Sumitomo Chemical and the Singapore government to establish a petrochemical base in Singapore with access to cheaper naphtha than in Japan and centered in the Southeast Asian market with its growing demand. The expansion into Singapore provided Sumitomo Chemical with valuable knowhow and experience in facing new challenges as Sumitomo Chemical moved toward full-scale globalization.

Singapore Petrochemical Complex around 2008

Promotion of the Singapore National Project to get their support and cooperation to promote the The Singapore petrochemical project commenced project as a national project. Although negotiations in December 1971 when Sumitomo Chemical received often entailed difficulties, Sumitomo Chemical finally a request for cooperation from the Singapore gov- secured their agreement to support the project as a ernment. Sumitomo Chemical expected this project national project. to enable it to secure an inexpensive supply of naph- In July 1977, a Japan-based investment company tha and a production base for expansion into the was established with the support of the Overseas Southeast Asian market. The project paved the way Economic Cooperation Fund (OECF) and a total of for further globalization. twenty-three companies from Japan including eleven In January 1975, Sumitomo Chemical concluded petrochemical companies. In August of the same year, a basic agreement with the Singapore government the Petrochemical Corporation of Singapore (Pte.) to construct a petrochemical complex centered on Ltd. (PCS) was launched as the local ethylene cen- an ethylene plant with an annual production capacity ter company. In 1980, two Japan-based investment of 300,000 tons. In the meantime, a global recession companies were established with plans to produce was triggered by the first oil crisis, and the future of derivatives such as polyethylene, polypropylene, and petrochemical businesses became uncertain. Despite ethylene glycol. In Singapore, three companies in this, Sumitomo Chemical was committed to mak- 1980 and one company in 1982 were respectively ing a success of the Singapore project. Sumitomo established to produce derivatives. Chemical approached the Japanese government and In early 1983, the PCS ethylene plant and some of Japan’s petrochemical industry, making strong efforts the derivatives plants were completed, but amid glob-

First phase of Singapore petrochemical project

First phase Founded Products at time of plant completion Main investors* Investing company Sumitomo Chemical 46.2%, Overseas Economic Cooperation Japan-Singapore Petrochemicals Company Limited (JSPC) July 1977 on Japan side Fund 20%

Investing company Nihon Singapore Polyolefin Co., Ltd (NSPC) March 1980 Sumitomo Chemical 78.57% on Japan side Mitsubishi Petrochemical Co., Ltd. 28%, Investing company Japan Singapore Ethylene Glycol Company (JSEC) May 1980 Nippon Shokubai Kagaku Kogyo Co., Ltd. 26%, on Japan side Mitsui Petrochemical Industries, Ltd. 26% Ethylene 300,000 tons, Propylene 160,000 tons, Local company Petrochemical Corporation of Singapore (Pte.) Ltd. (PCS) Aug. 1977 JSPC 50%, Singapore government 50% Butadiene 45,000 tons, BTX 126,500 tons

Low-density polyethylene 120,000 tons, Local company The Polyolefin Company (Singapore) Pte. Ltd.(TPC) May 1980 NSPC 70%, Singapore government 30% Polypropylene 100,000 tons

Phillips Petroleum Singapore Chemicals (Private) Limited Phillips Petroleum Company 60%, Singapore government 30%, Local company April 1980 High-density polyethylene 80,000 tons (PPSC) Sumitomo Chemical 10%

Denki Kagaku Kogyo (DENKA) 80%, Local company Denka Singapore Private Limited (DSPL) Sept. 1980 Acetylene black 5,200 tons Singapore government 20%

Ethylene oxide 80,000 tons, Local company Ethylene Glycols (Singapore) Private Limited (EGS) April 1982 JSEC 50%, Singapore government 28%, Sumitomo Chemical 2% Ethylene glycol 87,500 tons

* Percentage of shareholding is as of Jan. 27, 1984, except JSEC (as of May 1980) and EGS (as of April 1982).

32 Sumitomo Chemical 100 Years

capacity reached 965,000 tons, making the Singapore complex the largest of its kind in Southeast Asia. In May 2000, a new condensate splitter was built in collaboration between PCS and Shell Eastern Petroleum Ltd. to diversify the sources of the raw material, naphtha, and secure its stable supply. As for the production of derivatives, in October 2006, the linear low-density polyethylene plant was converted to make higher value-added polypropylene and total annual production capacity increased to 650,000 Start-up ceremony for first phase PCS tons. In December 2013, the Sumitomo Chemical Group built a plant to produce solution polymerization al economic confusion due to the second oil crisis, styrene-butadiene rubber, a raw material for high-per- commercial operations did not begin until February formance, fuel-efficient tires. At the same time, PCS 1984. In February 1985, all facilities for the first phase is in the process of constructing a facility to increase of the project were completed and the Singapore production of butadiene (annual production capacity Petrochemical Complex went into full-scale operation. of 100,000 tons) and its completion is scheduled for the second quarter of 2014. Start of the Second Phase In 1987, the Singapore government decided to Methyl methacrylate (MMA) business in Singapore move forward with the privatization of state-owned In the second phase of the Singapore petrochem- enterprises in hopes of better growth for capital mar- ical project, new businesses were added, such as the kets and more efficient use of funds, and indicated an production of methyl methacrylate (MMA) and acrylic intention to sell all government-owned shares in the acid. MMA monomer is used in cast sheets, cultured Singapore petrochemical project to the Shell Group. marble, MBS resin, transparent ABS resin, etc., and The wishes of the Singapore government were ulti- its demand was beginning to grow rapidly in the mately respected, and an agreement reached where- Southeast Asian market. by it handed over its stakes in PCS and the derivatives New plants were constructed in Pulau Sakra—an production companies. As a result, the Singapore island adjacent to Pulau Ayer Merbau, the island on government holdings—50% of issued shares of PCS, which PCS’s ethylene center is located—and connect- 30% of The Polyolefin Company (Singapore) Pte. ed by pipeline to PCS. Sumitomo Chemical Singapore Ltd., and 50% of Ethylene Glycols (Singapore) Private Pte Ltd was established to manage the MMA busi- Limited—were transferred to the Shell Group. ness, while production of MMA monomer and poly- Along with the development of Asian econo- mers, acrylic acid, etc. was undertaken by its two mies, the petrochemical business in Singapore also wholly-owned subsidiary companies as well as four advanced and, since 1985, PCS and the derivatives joint-venture companies. production companies have been in full operation. In the mid-2000s, the rapid increase in demand for As demand for petrochemical products was antici- MMA polymers used in IT-related products, such as pated to continue to increase in the Asian region, in liquid crystal displays and projection television, led to December 1994, Sumitomo Chemical and the Shell an expansion of the MMA market, with annual market Group as central players embarked on the second growth rate exceeding 7%. To meet this demand, MMA phase of the Singapore petrochemical project. polymer production was bolstered in August 2004. After two years of construction work, in April 1997, the This was followed by a second plant and a third one for ethylene plant in the second phase (annual production MMA monomer in August 2005 and in January 2008, capacity of 515,000 tons) started operation. Combined and a second plant and a third one for MMA polymers with the first-phase capacity, total annual production in December 2007 and in July 2012 respectively.

Second phase of Singapore petrochemical project

Second phase Start of operations Products at time of plant completion Investors Ethylene 515,000 tons, Propylene 258,000 tons, JSPC 50% Local company Petrochemical Corporation of Singapore (Pte.) Ltd. (PCS) April 1997 Butene-1 32,000 tons, MTBE 66,000 tons, BTX 217,000 tons Shell Group 50%

Low-density polyethylene 70,000 tons, NSPC 70% Local company The Polyolefin Company (Singapore) Pte. Ltd. (TPC) March 1997 Linear low-density polyethylene 120,000 tons, Polypropylene 120,000 tons Shell Group 30% Phillips Petroleum Company 50%, Local company Phillips Petroleum Singapore Chemicals (Private) Limited (PPSC) May 1997 High-density polyethylene 200,000 tons Singapore government investment company 30%, Sumitomo Chemical 20% Local company Denka Singapore Private Limited (DSPL) May 1997 Acetylene black 6,000 tons Denki Kagaku Kogyo (DENKA) 100% Local company Hoechst Acetyls (Singapore) Pte. Ltd. (HASL) July 1997 Vinyl acetate 170,000 tons Hoechst Group 100% Local company Seraya Chemicals Singapore Private Limited (SCSL) April 1997 Styrene monomer 315,000 tons, Propylene oxide 140,000 tons Shell Group 70%, Mitsubishi Chemical 30%

33 12 Separation of Pharmaceutical Business from Sumitomo Chemical and Inauguration of Dainippon Sumitomo Pharma Co., Ltd.

Since the 1980s, the environment surrounding the pharmaceutical business increased in severity. In a bid to improve efficiency, and flexibility in all areas (including production, sales, and research), Sumitomo Chemical and Inabata & Co., Ltd. separated and merged their pharmaceutical business to found Sumitomo Pharmaceuticals Co., Ltd. in 1984. In 2005, Sumitomo Pharmaceuticals acquired Dainippon Pharmaceutical Co., Ltd. in a merger to strengthen its business foundation in Japan and to improve its global expansion. Thus Dainippon Sumitomo Pharma Co., Ltd. was born.

Press conference to announce reaching of basic agreement among Sumitomo Pharmaceuticals, Dainippon Pharmaceutical, and Sumitomo Chemical on the merger

Founding Sumitomo Pharmaceuticals Co., Ltd. for use for Hepatitis C. Sales for 1992 and 1993 At the beginning of the 1980s, the Japanese gov- reached 40 billion yen in each year. Sumiferon thus ernment attempted to control medical costs cov- became a driving force for growth of SP. ered by the health insurance system. The prices of Pfizer Corporation of the United States and SP drugs were cut 51.2% cumulatively and the insurance signed a cross-licensing contract in March 1987. SP scheme was reformed, making the situation increas- granted Pfizer a license to use the substance patent ingly difficult for the Japanese pharmaceutical industry. of Sediel, an anxiolytic. In December 1993, SP devel- With this situation as background, Sumitomo oped Amlodin, a drug for hypertension and angina Pharmaceuticals Co., Ltd. (SP) was established on pectoris, using Pfizer’s substance patent. Amlodin February 6, 1984. The objective was to improve com- became a major product of SP, with sales exceeding petitiveness in the pharmaceutical business through 40 billion yen in 2003. enhanced efficiency in research and development Another major product was Meropen, a car- and improved flexibility in marketing. In October 1984, bapenem antibiotic, launched in September 1995. Sumitomo Pharmaceuticals commenced business with a capital of 5 billion yen. Sumitomo Chemical owned 60% and Inabata owned 40%. Sumitomo Chemical continued to produce active pharmaceutical ingredients and intermediates for SP. The first major product was interferon. Sumitomo Chemical was licensed the manufacturing technology of interferon from The Wellcome Foundation Ltd. of the United Kingdom in August 1980. In September 1985, SP completed the Ehime Bio Plant, a factory for interferon production. In January 1987, SP obtained approval to make interferon for kidney cancer and multiple myeloma and, in April of that year, sales began under the product name Sumiferon. In 1992,

demand for the drug increased when it was approved Ehime Bio Plant

34 Sumitomo Chemical 100 Years

Plant for Meropen active ingredients (Oita)

Meropen was recognized for its excellent efficacy and maceutical companies in Japan. It had capital of 22.4 it became the top selling carbapenem antibiotic in billion yen, with Sumitomo Chemical owning 50.1% Japan in December 2004. (Subsequently in June 2014, DSP changed its name to Concerning the production system, SP added Sumitomo Dainippon Pharma Co., Ltd.) new facilities for producing active ingredients and DSP put its emphasis on four main products: a new building for Meropen formulation in Oita in Amlodin, Gasmotin (a gastrokinetic agent), Prorenal order to comply with internationally recognized good (a vasodilator), and Meropen. It also began global manufacturing practices (GMP), to contribute to sales development of drugs, centered around a drug for expansion and to new product launchings through schizophrenia, named Latuda, of which Sumitomo enhanced production facilities. These facilities were Pharmaceuticals had begun pre-clinical trials in 1993. completed in September 2003. The existing facilities In order to prepare for sales of the product in the for active pharmaceutical ingredient production were United States, DSP acquired Sepracor Inc. for US$ 2.6 converted to an exclusive plant for Meropen active billion in October 2009. In April 2010, Sepracor merged ingredients. The new plant was built as a multipurpose with Dainippon Sumitomo Pharma America, Inc., and facility for many different drugs, such as Amlodin. At the new company changed its name to Sunovion that point, the active ingredient production division Pharmaceuticals Inc. in October of the same year. In was transferred to SP, which then became responsi- December 2009, a new-drug application was made ble for the entire production process, from active sub- to the US Food and Drug Administration (FDA) to stances to formulation. obtain approval of Latuda. The approval was granted in October 2010 and sales began in February 2011. Birth of Dainippon Sumitomo Pharma Co.,Ltd. The next step was marketing Latuda in Europe. The business environment in which the Japanese In March 2011, DSP made contracts for development pharmaceutical industry operates has become and selling of Latuda in 26 EU countries (excluding the increasingly challenging due to various factors, such United Kingdom) and Russia and three other non-EU as the government’s continuing initiatives to restrain countries with Takeda Pharmaceutical Co., Ltd. The medication expenditure through periodic drug price two companies developed it together, sharing the cutting and other measures, the soaring R&D invest- costs. Takeda Pharmaceutical got exclusive rights to ment for drug development, and the intensifying com- sell the product, with the condition that it paid royal- petition with US and European mega pharmaceuti- ties to DSP based on the sales amount. Latuda was cal companies. Within this environment, in October also approved by Health Canada in June 2012, and 2005, Sumitomo Pharmaceuticals acquired Dainippon DSP began sales in that country in September of the Pharmaceutical Co., Ltd. in a merger to strengthen same year. its business foundation in Japan and to improve its global expansion, thus forming Dainippon Sumitomo Pharma Co., Ltd. Dainippon Pharmaceutical has its roots in Osaka Pharmaceuticals, which was established in May 1897. Osaka Pharmaceuticals subsequently in 1898 merged with Dainippon Pharmaceutical, the first pharmaceutical company in Japan, and took its name. The new Dainippon Sumitomo Pharma Co., Ltd. (DSP) became one of the top ten pharmaceutical companies in Japan. It employed 1,500 medical representatives, putting it on a par with the largest phar- Latuda

35 13 Expansion of Agricultural Chemicals Business

With its high-level research and development capability, Sumitomo Chemical has launched many new agrochemicals and household insecticides. In addition, Sumitomo Chemical has undertaken strategic mergers and acquisitions both in Japan and internationally. As a result, Sumitomo Chemical successfully established an organization that makes it truly worthy of the description “global player.”

Head office of Valent U.S.A. Corp.

Product Line-up of Agricultural Chemicals Sector the United States, the world’s largest market, in April Sumitomo Chemical’s Agricultural Chemicals 2001, demand rose dramatically from 2004 when it Sector has insecticides, herbicides, and fungicides in proved highly effective on weeds in soybean fields its line-up of agrochemicals, insecticides and insect that had been difficult to control. Flumioxazin prod- repellants for household use, as well as feed additives ucts are sold under the trade names of Sumisoya, such as methionine for raising livestock, especially Valor, and others. Under the alliance with Monsanto poultry. Through these products, Sumitomo Chemical Co., Inc. entered in October 2010, flumioxazin prod- contributes to not only stable crop yields, increased ucts were applied to Monsanto’s weed management food production, but also clean and healthy lifestyles. program, which led to a great sales increase of flumi- In the agrochemical business, Sumitomo Chemical oxazin. launched a big hit herbicide. It was flumioxazin, an In the field of household insecticides, pow- herbicide that was registered for use on soybeans in erful products have been launched in Sumitomo Argentina in September 1993. After the registration in Chemical’s area of specialty, pyrethroids. In April 2002, Eminence was launched and proved extremely high mosquito knockdown efficacy compared with existing products. It is volatile at room temperature, and this characteristic realizes products with new concepts, such as non-heated fan devices for mosquito repellant and energy-free resin emanator. Demand for methionine, a feed additive, grew as poultry consumption expanded in Europe, North America, China and Southeast Asia in the 1990s. To meet this demand, the Ehime Works increased annual production capacity to 19,000 tons in 1995. Subsequently a second plant was constructed in 1998 and a third in 2005. A fourth plant was completed in 2010, for a total production capacity of 140,000 tons a year. In addition, in 2012, a 20,000-ton-a-year plant was built in Dalian, China, making Sumitomo Chemical a global supplier with capacity of 160,000 tons a year. Flumioxazin plant (Oita)

36 Sumitomo Chemical 100 Years

Agro Co., Ltd. (capital 9.38 billion yen, 60% owned by Sumitomo Chemical) was established to take over the Takeda Pharmaceutical agrochemical business, and in November 2007, it merged with Sumitomo Chemical. As a TSP, Sumitomo Chemical provides not only products, such as agricultural chemicals, fertilizer, farming materials and seeds but also information and services. TSP supports all aspects of agriculture, from soil preparation and cultivation to transportation and sales of crops. As a part of TSP activities, SUMIKA FARM Nagano was established in May 2009, and subsequently, six other agricultural corporations were established in various areas in Japan. The corporations are experimenting in and verifying new agricultural technology, as well as growing selected crops New methionine plant (Ehime) such as strawberries, tomatoes and others.

Strengthening the Foundation of Agrochemical Progress in Globalization Business in Japan Since the launch of Sumithion, export sales had In its agrochemical business in Japan, Sumitomo accounted for a large portion of Sumitomo Chemical’s Chemical positions itself as a total solution provid- Agricultural Chemicals Sector, meaning overseas er (TSP) and is making strong efforts to expand the business has taken an important role for the sec- sales into the non-crop use field. Sumitomo Chemical tor. Moreover from the late 1980s, globalization has is also strengthening its business with mergers and increased at a rapid pace, and Sumitomo Chemical acquisitions. Along with increasing the presence of now has production facilities and sales locations in Sumitomo Chemical in Japan through the sales chan- many countries of the world. nels acquired from Takeda Pharmaceutical, Sumitomo In April 1988, Sumitomo Chemical established Chemical also expanded sales of acquired products Valent U.S.A. Corp. as a joint venture (wholly owned by moving them into its global sales network. The inte- by Sumitomo Chemical since 1991) with Chevron gration of businesses therefore had enormous syner- Chemical Company and was able to make a full-scale gistic effects. The integration was handled in two stag- entry into the US market, the largest agrochemi- es. In November 2002, Sumitomo Chemical Takeda cal market in the world. In January 2000, Sumitomo Chemical acquired a department for biological pesti- cides of Abbott Laboratories and established Valent BioSciences Corp. Also in the major European countries, subsidiaries were established: Sumitomo Chemical France established in October 1990 (renamed Sumitomo Chemical Agro Europe S.A.S. in July 1994) and Philagro France S.A.S. established in June 1993. In Asia, manufacturing bases were founded, including SC Enviro Agro India Private Limited (SCEAI) established in April 2000 (merged with Sumitomo Chemical India Private Limited in September 2011) and Dalian Sumika Chemphy Chemical Co., Ltd. established in April 2003. Sumitomo Chemical’s business has been global- ized by mergers & acquisitions and business tie-ups. SUMIKA FARM Nagano In May 2001, Sumitomo Chemical acquired the household insecticide business of Aventis Crop Science. In April 2010, Sumitomo Chemical acquired capital in Founding of agricultural corporations (2009 to 2013) Australia’s Nufarm Limited and formed comprehen- (Unit: Millions of yen) sive tie-ups in the agrochemicals field. Sumitomo Chemical Company name Founded Capital Main crops In April 2011, the Agricultural Chemicals Sector ownership (%) made a fresh start with its new name of “Health and SUMIKA FARM Nagano May 2009 113.5 100%* Strawberries SUMIKA FARM Oita Dec. 2009 300.0 100%* Tomatoes Crop Sciences Sector,” expanding to the pharmaceu- Sunrise farm Saijo Aug. 2011 100.0 94% Lettuce, cabbage tical chemicals (active pharmaceutical ingredients and SUMIKA FARM Yamagata Sept. 2011 63.0 79% Tomatoes intermediates) business. SUMIKA FARM Mie Nov. 2011 120.0 100% Mitsuba Sunrise farm Toyota Feb. 2013 250.0 100% Tomatoes SUMIKA FARM Ibaraki July 2013 40.0 90% Cabbage Note: Capital is as of September 2013. * Includes affiliate ownership.

37 14 IT-related Chemicals Sector Established and Business Grows Sumitomo Chemical positioned the IT-related chemicals business as “one of the pillars supporting the company’s future” and established the IT-related Chemicals Sector in October 2001. South Korea, China, and Taiwan were identified as markets with the greatest potential, and production companies were established in those areas to actively expand business. With the dramatic widespread use of LCD panels, Sumitomo Chemical recorded strong growth in sales of LCD display materials, such as polarizing films and color filters.

Polarizing films

Establishing the IT-related Chemicals Sector were consolidated into a single unit when the IT-related In the latter half of the 1990s, the use of the Chemicals Sector was established on October 1, Internet, personal computers and mobile phones 2001. In the ICT (Information and Communication expanded from business applications to person- Technology) market, to expand business by quickly al applications. With such rapid development of IT, responding to the needs of customers, marketing Sumitomo Chemical added IT-related chemicals busi- as well as research and development needed to be ness to its medium-term business plans (FY 2001 to pursued in a comprehensive—total solution—manner 2003), positioning it as the third pillar (following poly- under one business unit. olefin and life sciences) that would support Sumitomo The new sector consisted of four divisions: Optical Chemical into the future. To strengthen and nurture the Materials, including polarizing and retardation films; IT-related chemicals business, the optical product and Semiconductor Process Materials, which included the electronic material businesses, and a part of the photoresist for manufacturing semiconductors and functional material business, which had been included high-purity electronic chemicals; Electronic Materials in the Basic Chemicals and Fine Chemicals Sectors, for epoxy resin molding compounds for encapsulation of semiconductor devices, and high-performance polymers; and Chemical Compound Semiconductor Net sales of IT-related Chemicals Sector (FY 2001 to FY 2013) Materials, which handled MOEPI wafers, organic met-

(Unit: Billions of yen) als, and other products. Because research and prod- (%) 400 Net sales of IT-related Chemicals Sector (left axis) uct development are essential in IT, an IT-related 22 Proportion of IT-related Chemicals Sector (right axis) Chemicals Research Laboratory was established 350 20 at the same time the sector was launched, integrat- 18 300 16 ing research, production and sales. Production of 250 14 color filters was handled by a joint venture between 12 200 Sumitomo Chemical and two companies in Taiwan, 10 New STI Technology, Inc. (established in May 2005 in 150 8 Ehime, 40% owned by Sumitomo Chemical; merged 100 6 with Sumitomo Chemical in April 2006) 4 50 2 At first, the operating rate for products in the 0 0 IT-related Chemicals Sector was only 50-60% of 2001 02 03 04 05 06 07 08 09 10 11 12 13 (Fiscal year) capacity. But through building factories near the Note: Proportion is to total Sumitomo Chemical sales. 38 Sumitomo Chemical 100 Years

factories of customers in South Korea, China, and LCD structure Taiwan, and creating a product supply system, Sumitomo Chemical benefited from the sizable production increases by those customers of flat-screen TVs and LCD panels. As a result, between FY 2002 and 2005, net sales for the sector increased each year Glass substrate by 30 to 50%. In FY 2013, net sales were 362.3 billion (Low soda alumina) Color ﬁlter layer yen, accounting for 16% of sales of the Sumitomo (Color ﬁlter, Color resist)

Liquid crystal layer Chemical Group. ITO electrode

TFT layer (Photoresist, Target, Etchant, Stripper, Overseas Expansion of LCD Materials Business High-purity chemicals, etc.) Glass substrate The IT-related chemicals field has the following (Low soda alumina) Light-diffusion panel characteristics: (1) the product life cycle is short, (2) Light-guide panel Note: Sumitomo Chemical a large initial investment is required, and (3) multiple Lamp/LED products are indicated by product names written in red and differing technologies are required to properly meet customer needs. To be successful in Sumitomo Chemical’s focused business of LCD panels, the beginning of overseas production was in May 2001, requests of customers must be accurately interpreted when Dongwoo Fine-Chem Co., Ltd. (established to to ensure both superior performance and cost benefit produce high purity electronic chemicals for semi- as an assembled component, providing customers conductor chip manufacturing) began manufactur- with the best possible solutions. ing chip-cutting polarizing films. In April 2003, the To deal with these characteristics, the sector put production of color filters began, and in September its top priority on accelerating research to develop of that year, the company began the production of high-quality products that meet market requirements. polarizing film rolls. As a result, Dongwoo Fine-Chem At the same time, Sumitomo Chemical pursued pro- Co., Ltd. has become a core company in the IT-related duction and business activities closely attuned to cus- Chemicals Sector, with the largest production capacity tomer needs, and actively expanded business in South for LCD materials. Korea, Taiwan, and China, and other areas. In June 2001, Sumitomo Chemical and Inabata LCD panels used in flat-screen TVs, personal com- & Co., Ltd. invested together to establish Sumika puters, mobile phones, etc. are composed of many Technology Co., Ltd. in Taiwan. In April 2004, a com- layers of materials. Of those, Sumitomo Chemical prehensive production system for polarizing films supplies polarizing films for LCD, color filters, light-dif- was built. The first production location in China was fusion panels, light-guide panels, and others. The Shanghai KSC Optical Device Co., Ltd., founded in September 2001 (renamed Sumika Electronic Materials (Shanghai) Co., Ltd. in March 2004), followed by Sumika Electronic Materials (Wuxi) Co., Ltd. in July 2004 and Sumika Huabei Electronic Materials (Beijing) Co., Ltd. in November 2009. For production in Europe, Sumika Electronic Materials Poland Sp. Zo.o. was established in August 2006 (with production ending at the end of 2012).

Dongwoo Fine-Chem plant (South Korea)

Sumika Technology plant (Taiwan)

39 15 Progress of the Rabigh Project

The Rabigh Project in Saudi Arabia is a world-scale integrated oil refining and petrochemical complex. This project has great significance for Sumitomo Chemical, toward the initiative of “Promoting Globally Integrated Management.” In the second quarter of 2009, the Phase I facilities with annual capacities of 1.3 million tons of ethylene and 900,000 tons of propylene began operation. In May 2012, Sumitomo Chemical confirmed the feasibility of the Rabigh II Project and decided to proceed by finalizing various project elements.

Rabigh Refining and Petrochemical Company complex

Integrated refinery and petrochemical complex: undertaking would contribute to a closer relationship The Rabigh Project between Japan and Saudi Arabia. The Rabigh Project dates back to 2002 when In August 2005, Sumitomo Chemical and Saudi an investment bank invited Sumitomo Chemical to Aramco signed a joint-venture agreement and Rabigh place bids. The project was to be run jointly with Refining and Petrochemical Company (Petro Rabigh) the Saudi Arabian Oil Company (Saudi Aramco), the was established in September as a fifty-fifty joint ven- state-owned oil company. A world-scale integrated ture. In March 2006, a groundbreaking ceremony was oil refining and petrochemical complex was to be held, to which the Saudi Arabian Minister of Petroleum built in Rabigh in Saudi Arabia. Sumitomo Chemical and Mineral Resources, other government officials was selected as the partner company from among from both countries and guests from companies relat- the leading chemical companies in the world. In May ed to the project were invited. 2004, a memorandum between Sumitomo Chemical and Saudi Aramco was signed. Completing the Phase I Project It is one of the largest integrated refining and pet- In carrying out the Rabigh Project, there were geo- rochemical complexes in the world and it takes full political risks involved. For the purpose of mitigating advantage of a stable supply of cost-competitive those risks, Sumitomo Chemical conducted thorough feedstocks provided by Saudi Aramco as well as its research in advance, making use of project financing economies of scale. Although Sumitomo Chemical had been operating a large-scale complex in a petroleum-refining center, Singapore, this project was Sumitomo Chemical’s first attempt to establish a foothold in an oil and gas-producing country. The project, therefore, opened a new stage in Sumitomo Chemical’s global business strategy. At the same time, it was expected that the Rabigh Project would promote the development of downstream industries, and contribute to sustainable economic development in the Kingdom of Saudi Arabia through the creation of employment opportunities and diversification of its

manufacturing industries. It was also hoped that the Signing the FS Memorandum, Rabigh Phase I Project

40 Sumitomo Chemical 100 Years

and investment insurance. Of the total cost of US$9.8 billion, about 60% was covered by project financing. In March 2006, Sumitomo Chemical signed financing contracts with a consortium of banks, including the Japan Bank for International Cooperation (JBIC), Saudi Arabian financial institutions and commercial banks of other countries. In October 2008, Petro Rabigh took over from Saudi Aramco petroleum refining facilities with a daily capacity of 400,000 barrels. In April and May of 2009, new ethane cracker facilities and fluid catalytic crack- ing devices, respectively, went into operation. The petroleum refining and integrated petrochemical complex facilities were built on 2,000 hectares (nine times the size of the Chiba Works). At the peak of construction, 40,000 people were working there. The annual Rabigh Refining and Petrochemical Company complex production capacities of the main facilities were 2.9 million tons of naphtha, 1.3 million tons of ethylene and 900,000 tons of propylene. expansion of the existing petroleum refining and pet- In January 2008, Petro Rabigh held its initial public rochemical complex of Petro Rabigh. In May 2012, offering (IPO) on the Saudi Arabian stock exchange. Sumitomo Chemical confirmed the feasibility of the Following the IPO, paid-in-full capital became SAR Rabigh II Project and decided to proceed by finaliz- 8.76 billion (approximately 270 billion yen), where ing various project elements, such as agreements for Sumitomo Chemical and Saudi Aramco each had a engineering, procurement, and construction and other 37.5% stake in Petro Rabigh. project contracts. The Rabigh II Project, by expanding the ethane Starting Work on the Phase II Project cracker and building a new aromatics complex, will In April 2009, Sumitomo Chemical and Saudi use 30 million standard cubic feet per day of eth- Aramco signed the Memorandum of Understanding, ane and approximately 3 million tons per year of which led to a fea- Capacity of derivative products from Rabigh Phase I Project (2009) naphtha as feedstock to produce a variety of high sibility study for the value-added petrochemical products. Each plant Names of products Production capacity development of will be brought on stream, beginning in the first half Linear low-density polyethylene 600,000 tons the Rabigh Phase High-density polyethylene 300,000 tons of 2016. The total investment is currently projected II Project (Rabigh II Monoethylene glycol 600,000 tons to reach approximately US$7 billion. The Rabigh II Polypropylene 700,000 tons Project) as a major Propylene oxide 200,000 tons Project’s main products will be EPDM (ethylene propylene diene methylene linkage), thermoplastic polyolefin (TPO), methyl methacrylate (MMA) monomer, MMA polymer (PMMA), low density polyethylene/ethylene vinyl acetate (LDPE/EVA), para-xylene/benzene, cumene and phenol/acetone.

Rabigh Phase II Project derivative product plans (2012)

Product name Production capacity EPDM Approx. 70,000 tons TPO Approx. 10,000 tons MMA monomer Approx. 90,000 tons PMMA Approx. 50,000 tons LDPE/EVA Approx. 80,000 tons / Approx. 70,000 tons Para-xylene / Benzene Approx. 1.3 mil. tons / Approx. 400,000 tons Cumene Approx. 400,000 tons Completion ceremony for the Rabigh Project Phenol / Acetone Approx. 250,000 tons / Approx. 150,000 tons

41 16 Aiming to be a Truly Global Chemical Company

Sumitomo Chemical carried out measures to promote globally integrated management, such as establishing a business philosophy, introducing a new HR system and establishing corporate branches with the aim of becoming a truly global chemical company. The Sumitomo Chemical Group as a whole has also been practicing “Sustainable Chemistry” built on its CSR-based management.

Volunteers planting mangrove trees in Thailand

Dealing with Global Operations markets As part of its Three-Year Corporate Business 2. A company that continues to grow on the strength Plan covering the fiscal years from 2004 to 2006, of accumulated technologies, with a focus on high Sumitomo Chemical set forth its vision for the 21st added value and profitability century: becoming a truly global chemical company 3. A company that operates in accordance with as a major player in every area of business operations. global standards, places importance on share- The gist of Sumitomo Chemical's vision of the holder value, and is sensitive to aspirations of its company for the 21st century is as follows: employees for fulfillment of their lives 1. A company with competitive strength in global Aiming to achieve these goals, Sumitomo Chemical reinforced its overseas operational bases and accel- Sumitomo Chemical Group sales and proportion of overseas sales (FY 1996 to FY 2013) erated its business expansion to extend its global reach while strengthening and enhancing corporate (Unit: Billions of yen) (%) governance and management systems to support the 2,500 60 Net sales (left axis) further development of its businesses on the global Proportion of overseas sales (right axis) stage. One aspect was revising the HR system. For 50 2,000 managers, in April 2001, new job-based grading and performance evaluation systems were introduced. For 40 1,500 non-managerial employees, in July 2007, ability-based

30 grading was abolished and a new role-based grading system was adopted. Global HR initiatives, such as 1,000 20 establishing global positions, identifying group core talent, integrating HR systems to include recruitment, 500 10 talent development and performance evaluation, were taken to create a mechanism to put the right person in 0 0 the right job on a global scale. 1996 98 2000 02 04 06 08 10 12 13 (Fiscal year) Sumitomo Chemical established Corporate

42 Sumitomo Chemical 100 Years

Group companies by assisting in regional business planning and by providing professional specialized corporate services and support.

Setting a Business Philosophy From 2005 onward, the Sumitomo Chemical Group sales saw rapid increases, but globalization was growing at an even faster pace. By FY 2010, the Sumitomo Chemical Group sales overseas surpassed 50% of total sales, and by the end of March 2014, overseas employees exceeded 40% of the Sumitomo Chemical work force (consolidated). Group representatives from abroad meet at the Global Managers Meeting This rapid globalization gave the group as a whole diversity in terms of both culture and value orien- Sumitomo Chemical Group employees in Japan and overseas (2008 to 2014) tations. In January 2009, Sumitomo Chemical took a fresh look at its fundamental business principles, (Unit: 1,000 employees) (%) mission and values, and committed them to writing 25 Japan (left axis) Overseas proportion 45 Overseas (left axis) (right axis) as a business philosophy for all the employees of the 40 Sumitomo Chemical Group companies to share and 20 35 identify with. 30 Sumitomo Chemical’s Business Philosophy 15 25 1. We commit ourselves to creating new value by building on innovation. 20 10 2. We work to contribute to society through our 15 business activities. 10 5 3. We develop a vibrant corporate culture and 5 continue to be a company that society can trust.

0 0 2008 09 10 11 12 13 14

Note: 2008 figures are as of end of September; other figures are as of end of March. Corporate Statement

Sumitomo Chemical started business in 1913 as a Branches (CB) as the foundation for global expansion producer of fertilizers from sulfur dioxide gas emitted at its four business bases around the world. With a by copper smelters. This business, which solved the environmental problem of air pollution while meeting view to strengthening and streamlining the headquar- the social demand for more agricultural production, ters functions to support its global business opera- embodied the business philosophy of the Sumitomo tions, Sumitomo Chemical established its first CB in family handed down from the 17th century. Singapore in 2007, followed by New York, Brussels “Our business must benefit society, not just our inter- and Shanghai. Each CB provided Group companies ests.” Throughout our history of almost a century, we with specialized corporate expertise and services in at Sumitomo Chemical have lived by this credo. We have worked to build better lives by developing vari- areas such as HR, internal control, auditing, legal & ous businesses that meet people’s evolving needs. At ethics compliance, IT, accounting, purchasing, and the same time, we have continuously delivered tech- logistics. nological innovation while paying special attention to In pursuit of business development and more effi- product quality, safety and the environment. cient business management, the CBs in Shanghai Looking to the future, we will create new value beyond and Singapore were raised to Regional Headquarters the boundaries of chemistry by combining a variety of ideas, views and technologies. We will also continue (RHQ) as Sumitomo Chemical (China) Co., Ltd. for to take up the challenges facing the globe, from meet- China in June 2011 (office moved to Beijing in August ing basic needs, to protecting the environment, to 2011) and Sumitomo Chemical (Asia Pacific) Pte Ltd in addressing the issues of adequate supplies of food, March 2013 to cover Southeast Asia, South Asia and energy, and other resources. Oceania. Subsequently in January 2014, Sumitomo In this endeavor, each of us at Sumitomo Chemical Chemical raised the remaining two CBs to RHQ as will work together to enhance our capabilities, explore new possibilities every day, and overcome the chal- Sumitomo Chemical Europe S.A./N.V. to cover Europe lenges lying ahead with enthusiasm and a strong and Turkey and Sumitomo Chemical America, Inc. sense of mission. for North America, which marks the beginning of Sumitomo Chemical will seek to continue to build trust Sumitomo Chemical's worldwide RHQ coverage. Each and bring joy to people across the world through con- company will act as Sumitomo Chemical’s regional stant innovation. representative, supporting the Sumitomo Chemical

43 In March 2008, the Corporate Statement was for- facturing processes that limit environmental impact mulated to summarize common values, pride, and as much as possible throughout the life cycle of commitment to share as employees of the Sumitomo products, and Clean Products, which are products Chemical Group companies. In July 2003, the designed with improved performance in terms of Sumitomo Chemical Charter for Business Conduct environmental friendliness, safety, and quality. From was put in place to provide the basis for the com- those, new methods for producing caprolactam and pany’s compliance system and show the important propylene oxide have been evaluated especially guidelines to be followed by individual employees in well as gentle on the environment, winning Green & conducting their daily business activities. Sustainable Chemistry Awards.

A Mission for Sustainable Chemistry Responsible Care —CSR Management The concept of “responsible care” first came as Ever since its inception, with its mission of solving a proposal from an association of chemical prod- environmental problems and increasing agricultural uct manufacturers in Canada in 1985. It referred to productivity, Sumitomo Chemical has upheld the con- activities for ensuring safety, health, quality, and envi- viction that the essence of corporate social responsi- ronmental issues throughout a product’s life cycle. bility (CSR) is to contribute to the sustainable develop- The idea was well received and increasingly popu- ment of society through business activities. larized around the world. The International Council With this philosophy in mind, in November 2004, of Chemical Associations adopted it in 1990, and in the Basic CSR Policy was established. With the con- 1995, the Japan Chemical Industry Association estab- cept of sustainable chemistry, Sumitomo Chemical is lished the Japan Responsible Care Council, in which actively pursuing CSR activities, achieving balance in Sumitomo Chemical participated, in the same year. the three areas of “economy,” “responsible care,” and Sumitomo Chemical began such activities ahead of “society.” this, in 1991, and in April 1994, established the Basic The measures that best represent sustainable Policy on Product Quality, the Environment and Safety. chemistry are Green Processes, which are manu- This policy set down the top priorities for safety, the environment, and product quality at all stages of busi- Receiving the Green & Sustainable Chemistry Award ness activities. (In November 2005, the policy was revised to “Corporate Policy on Safety, the Environment Award (Year) Winning theme and Product Quality.”) The development and industrialization of the vapor phase Beckmann 3rd GSC Award (2003) In the more than twenty years that have followed, rearrangement process for the production of -caprolactam the Sumitomo Chemical Group has undertaken a wide The development and industrialization of the hydrogen chloride oxidation 4th GSC Award (2004) process range of activities, such as ensuring safe and stable operations, improving environmental performances 8th GSC Award (2008) The development of new propylene oxide process by cumene recycling and strengthening effective management of chemicals including the communication of chemical risks throughout the supply chain, together with open and transpar- Basic CSR Policy ent communication with stakeholders. Responsible Care is the foundation for Sumitomo Chemical CSR By continuously creating and providing useful new activities and one of the Sumitomo Chemical Group’s technologies and products that have never before top priorities. existed, Sumitomo Chemical will build corporate value while contributing to both the solution of prob- Promoting Activities to Benefit Society lems facing our environment and society, and the Social contribution activities are based on three enrichment of people’s lives. categories of contributions: (1) community contribu- In order to accomplish this, the Company will work to tion, (2) future contribution, and (3) global contribution; achieve a balance of profitable business operations, and these activities are aimed at securing safety and the preservation of the environment, safety, health, health, protecting the environment, raising children product quality and social activity. We will also pursue and promote our CSR activities with consider- who will lead the next generation, and assisting in nat- ation for the interests of all our stakeholders, includ- ural disaster relief. ing our stockholders, employees, business partners, Concerning social contribution, Sumitomo and the local residents of all regions in which we Chemical has supported African countries through conduct business. Through our endeavors in these the distribution of Olyset Net, a mosquito net to pre- areas, we hope to play a significant role in building a vent malaria, and this activity is globally highly reput- sustainable society, while continuing to grow in order ed. The net is made from insecticide-incorporat- to realize our goal of becoming a truly global chemical company in the 21st century. ed polyethylene fibers, which is a good example of “Creative Hybrid Chemistry.” In October 2001, Olyset Net received the world’s first recommendation from

44 Sumitomo Chemical 100 Years

porting the areas affected by the Great East Japan Earthquake in a variety of ways since immediately after the earthquake on March 11, 2011. Specifically, in the summer of 2011, Sumitomo Chemical donated insecticides to deal with flies and other pest infes- tations. Since 2011, employee volunteers have vis- ited the disaster-stricken areas to clean up debris, install highly functional insecticidal nets, and donate functional innerwear made from Sumitomo Chemical products to people living in temporary housing. Sumitomo Chemical has sponsored science exper- Olyset Net manufacturing plant in Tanzania iment classes, mainly for local elementary school students as a part of extracurricular activities during the World Health Organization (WHO) as a “long-last- the summer vacation period. Moreover, in Sumitomo ing insecticidal net” and it gained widespread use Chemical’s Head Office (Tokyo) cafeteria, special through WHO’s “Roll Back Malaria” campaign. In menu items have been offered made with foods pro- response to WHO’s request for expanded production, duced in the disaster-stricken areas, and a portion of Sumitomo Chemical improved its production system sales from these meals has been donated to a schol- and provided the manufacturing technology free of arship fund to support children who lost their parents charge to A to Z Textile Mills Limited, a Tanzanian in the March 11 tsunami. Sumitomo Chemical has also manufacturer, which began to produce Olyset Net in been holding fairs to sell produce and processed food September 2003. Vector Health International Limited from earthquake-affected areas. (VHI), a joint venture between A to Z Textile Mills In addition to the above, Sumitomo Chemical and Sumitomo Chemical, opened a new factory in has been conducting a mangrove planting project in February 2007, employing approximately 7,000 peo- Thailand. ple. This project has contributed to not only the prevention of malaria but also local economic development. In 2010, Sumitomo Chemical increased the total production capacity in Tanzania, China, and Vietnam to 60 million nets a year, which has greatly contributed to reducing the number of people suffering from malaria all over the world. Believing that development of a proper primary education system and related infrastructure is essential to the growth of African countries, Sumitomo Chemical has been using a part of the proceeds from the Olyset Net business for construction of elementary and junior high school buildings, lunch facilities, and dormitories for teachers in African countries. The Sumitomo Chemical Group has been sup- Volunteer activities in areas affected by the Great East Japan Earthquake (installing functional insecticidal nets)

Sumitomo Chemical has been holding fairs to sell produce and processed food from quake-affected areas.

45 17 For a Better Tomorrow

In order to accomplish sustained growth over the next 100 years, Sumitomo Chemical is to its full extent promoting the policy measures of the new Three-Year Corporate Business Plan for FY 2013-2015. The plan is devoted to a period of strengthening the foundations of Sumitomo Chemical’s business. Under the Corporate Slogan of “Creative Hybrid Chemistry For a Better Tomorrow,” Sumitomo Chemical is contributing to a sustainable society as well as aiming to take a significant leap forward. The world has many global-scale issues to deal with, but Sumitomo Chemical hopes to provide new technologies and products that will help to solve these issues and realize abundant lifestyles for people on earth. In this way, Sumitomo Chemical is doing its best to achieve sustainable growth together with society as a diversified global chemical company.

Polymer organic light emitting diode (PLED) prototype testing (Tsukuba Material Development Laboratory)

Change and Innovation—for the next hundredth To strengthen the competitiveness of the Chiba anniversary Works, the production base in Japan of its petro- In the FY 2013-2015 medium-term corporate chemical business, Sumitomo Chemical has decided business plan, under the new slogan of “Change to close down an aging ethylene plant (annual produc- and Innovation—for the next hundredth anniversary” tion capacity: 415,000 tons) in or before September Sumitomo Chemical will promote change and innova- 2015 when the next periodic shutdown maintenance tion in the three areas of business structure, business will take place, and thereafter procure ethylene and development, and corporate culture, and work on five other basic petrochemical feedstock from Keiyo priority management issues to achieve its performance Ethylene (affiliate), which operates the newest and the targets: (1) enhancing financial strength, (2) restructur- largest production facilities in Japan. ing businesses, (3) developing next-generation busi- With respect to (3), six core technologies will be nesses, (4) promoting globally integrated management, used and combined to introduce new businesses to and (5) ensuring strict legal and ethical compliance as contribute to a sustainable society: catalyst design, well as maintaining safe and stable operations. high-precision processing, design of functional organ- With regard to (1), Sumitomo Chemical is striv- ic chemicals and polymers, analysis of bio-mecha- ing to take measures to reduce its interest-bearing nisms, device design, and design of functional inor- liabilities through three major initiatives: improving ganic materials. profitability, rigorously selecting investments, and Sumitomo Chemical has identified environment improving asset efficiency to secure greater strategic and energy, life sciences, and ICT (Information and freedom to aggressively pursue growth opportunities. Communication Technology) as three areas with high The second priority management issue calls for growth potential and has been making strong efforts Sumitomo Chemical to exit or downsize underper- to develop next-generation businesses in these areas. forming businesses, improve its business portfolio Regarding (4), Sumitomo Chemical will globally and boost profitability. One example in the field of pet- optimize the functions in each business—from R & D rochemicals is optimizing of production systems. to manufacturing, marketing, sales and logistics—in Japan (Chiba): Develop new technologies, prod- terms of market, technology, cost and business envi- ucts and know-how and roll them out globally, playing ronment. the roles of “mother plant” and “mother laboratory.” Concerning (5), Sumitomo Chemical will further Singapore: Deliver high value-added products, strengthen initiatives to ensure strict legal and ethical meeting the needs of key customers in Asian markets. compliance across the Sumitomo Chemical Group, Saudi Arabia: Produce cost competitive products, including subsidiaries and affiliates around the world, taking advantage of low-cost feedstock and fuels. along with achieving safe and stable operations by

46 Sumitomo Chemical 100 Years

reinforcing its safety culture and enhancing safety assurance capabilities.

For a Better Tomorrow Toward Sumitomo Chemical’s next 100 years beginning in 2015, Sumitomo Chemical is fully applying all of its resources to contribute to a sustainable society and to realize strong advances in the future, based on the Corporate Slogan of “Creative Hybrid Chemistry For a Better Tomorrow.” Sumitomo Chemical practices sustainable chem- Touch sensor panel istry as part of its CSR-based management to achieve a balance among the three areas of economy (business), Responsible Care (safety, environment, product Anode quality), and society (benefiting society) in all aspects Cathode of its corporate activities. People in the world today face many problems that are difficult to solve, beginning with the environmental issues of resources and energy, food supply, and oth- Separator ers. Sumitomo Chemical has drafted a medium-term corporate business plan from FY 2013 that aims to promote next-generation businesses through the promotion of “Creative Hybrid Chemistry” by focusing on Heat resistant separator three key areas of environment and energy, life sciences, and ICT, to develop value-added products and technologies. In addition, the commitment describes the desirable future direction of Sumitomo Chemical to be a diversified global chemical company that will progress with confidence to achieve sustainable growth together with society, contributing to increasing affluence and the resolution of global challenges facing humanity. Acting on this basic philosophy, the Sumitomo Chemical Group takes as its mission contributing to the society to which it belongs, using its strength in the diverse fields of chemistry. With this goal before it, Sumitomo Chemical steps confidently Organic thin-film solar cell into the next 100 years.

Agrochemical evaluation test in greenhouse

PLED exhibit (Designed by Motoko Ishii Lighting Design Inc.)

47 Reports from Regional Headquarters

Report from Beijing by Sumitomo Chemical (China) Co., Ltd.

Major Group Companies in China

Number of Sector Company name employees* Founded Business description

Manufacturing and sales of polypropylene Zhuhai Sumika Polymer Compounds Co., Ltd. 152 May 2005 compounds

NOC Asia Limited 19 October 2009 Sales of propylene oxide

September Manufacturing and sales of polypropylene Sumika Polymer Compounds Dalian Co., Ltd. 42

Plastics Sector 2011 compounds Petrochemicals &

Manufacturing and sales of polypropylene Jilin Dongcheng Sumika Polymer Compounds Co., Ltd. 126 August 2011 compounds

Manufacturing of optical functional films and Sumika Electronic Materials (Wuxi) Co., Ltd. 803 July 2004 light diffusion plates

September Manufacturing and sales of optical functional Sumika Electronic Materials (Shanghai) Co., Ltd. 30 2001 films

February Sumika Electronic Materials (Shanghai) Corporation 102 Sales of IT-related chemicals 2009

Manufacturing and sales of processing chem- Sumika Electronic Materials (Hefei) Co., Ltd. 7 October 2009 icals for LCD panels, sales of other LCD and semiconductor-related materials

November Manufacturing and sales of polarizing films and Sumika Huabei Electronic Materials (Beijing) Co., Ltd. 1

IT-related Chemicals Sector Chemicals IT-related 2009 components used in LCD panels

February Business and technical assistance for IT-related Sumika Electronic Materials (Shenzhen) Co., Ltd. 11 2011 materials

November Manufacturing and sales of chemicals for semi- Sumika Electronic Materials (Xi’an) Co., Ltd. 55 2012 conductor production processing

November Sales and manufacturing of products relating to Shanghai Lifetech Household Products Co., Ltd. 28 1995 household insecticides

Manufacturing of crop protection chemical Dalian Sumika Chemphy Chemical Co., Ltd. 42 April 2003 intermediates

Manufacturing and sales of methionine and Dalian Sumika Jingang Chemicals Co., Ltd. 144 October 2009 high-performance greenhouse films

Sales and development of crop protection December

Health & Crop Sciences Sector Sumitomo Chemical Shanghai Co., Ltd. 36 chemicals, feed additives and environmental 1997 health products

Sumitomo Chemical (China) Co., Ltd. 25 June 2011 Regional Headquarters for China

Providing HR and accounting services to group Sumika Business Service (Dalian) Co., Ltd. 35 March 2013 companies in China Corporate

Sumika Jingang Trading (Dalian) Co., Ltd. 7 January 2013 Sales of agricultural materials

* The numbers of employees above are as of March 2014 not including dispatched or part-time personnel.

48 Sumitomo Chemical 100 Years

Consolidated Net Sales by Sector in China (FY 2013)

(Unit: Billions of yen)

Sector Net sales

Basic Chemicals Sector 1.8

Petrochemicals & Plastics Sector 25.0

IT-related Chemicals Sector 73.5

Health & Crop Sciences Sector 15.6

The figure for Basic Chemicals Sector includes the net sales of the Basic Chemicals Sector of Sumitomo Chemical Shanghai Co., Ltd.

Medium-term Economic Forecast and In the IT-related Chemicals Sector, major client Activities of Group Companies: China companies with whom we have built good relation- ships have constructed factories in inland China. The twelfth five-year plan (2011-2015) by the Sumitomo Chemical established a production com- Chinese government had a goal of 7% average pany in Xi’an City in 2012 to develop business in annual growth for real GDP. From 2016 onward, inland areas. Business bases already established however, it is expected that China will have difficul- in China are integrating marketing data, such as ty maintaining this steady growth and see a gentle client data and needs, to expand business for the decline in pace. Sumitomo Chemical Group as a whole.

There are three major factors for the slowing of In 2003, the Health & Crop Sciences Sector economic growth in China. The first is a serious pol- established a joint-venture company in Dalian City lution problem, the second is a tight energy supply, with a powerful group of local companies to produce and the third is the decrease in the working popula- agrochemical intermediates. In 2009, Sumitomo tion (ages 15 to 64) projected to begin in 2015. Chemical formed a joint venture with another partner In spite of these restraining factors, new drivers to produce a feed additive and high-performance of economic growth such as increases in personal greenhouse films. In 2013, another joint venture with consumption, development of tertiary industries, and the same partner was founded to expand the sales expanded development of inland regions are antici- of high-performance greenhouse films, as well as pated to support growth. sell high value-added agricultural materials, the market of which is viewed as promising. The Sumitomo Chemical Group is expanding business in China as the market continues to grow, The Sumitomo Chemical Group has estab- although at a slower pace than that in the past. lished four Regional Headquarters, for China, for Southeast Asia/South Asia/Oceania, for Europe In the Petrochemicals & Plastics Sector, in 2005, and Turkey, and for North America. These Regional Sumitomo Chemical began operations in the city Headquarters will act as Sumitomo Chemical’s of Zhuhai to produce and sell polypropylene com- regional representatives in the regions and support pounds, mainly for automobile materials. In 2011, Group companies by assisting in their business Sumitomo Chemical built factories in Jilin Province planning for the regions and by providing various and Dalian City. In Jilin, in particular, a joint venture professional corporate services and support in areas with a local Chinese corporation was established such as HR, accounting, information technology, and with the objective of supplying high-performance business compliance, which are key to sustainable materials to Chinese automobile manufacturers, and efficient business operations. which are expanding their presence in the domestic market. Sumitomo Chemical provides the joint In China, Sumitomo Chemical (China) Co., Ltd. venture with the polypropylene compounding tech- was established in June 2011 to serve as Regional nology and its Chinese partner provides it with the Headquarters. know-how to sell products to Chinese automobile manufacturers. Sumitomo Chemical hopes to have synergies created through this collaboration between Japanese and Chinese companies.

49 Reports from Regional Headquarters

Report from Singapore by Sumitomo Chemical (Asia Pacific) Pte Ltd

Major Group Companies in Southeast Asia, South Asia and Oceania

Number of Sector Company name employees* Founded Business description

Sales of MMA monomer and polymer, crop Sumitomo Chemical Singapore Pte Ltd 122 July 1996 protection chemicals, IT-related chemicals and other products

Manufacturing and sales of MMA monomer and Singapore Methyl Methacrylate Pte. Ltd. 119 July 1996 polymer

Sumipex (Thailand) Co., Ltd. 332 May 2002 Production and sales of MMA cast sheets Basic Chemicals Sector February Manufacturing and sales of textile finishing res- Bara Chemical Co., Ltd. 152 1973 ins and rubber chemicals

September Sumika Polymer Compounds (Thailand) Co., Ltd. 76 Manufacturing of polypropylene compounds 2008

Sumitomo Chemical Asia Pte. Ltd. 106 July 1990 Sales of petrochemical products

Manufacturing and sales of ethylene and pro- Petrochemical Corporation of Singapore (Pte.) Ltd. 361 August 1977 pylene, etc.

Production and sales of polyethylene, polypro- The Polyolefin Company (Singapore) Pte. Ltd. 361 May 1980

Petrochemicals & Plastics Sector pylene, etc.

Sales, development, manufacturing and regis- Sumitomo Chemical India Private Limited 367 April 2000 tering of crop protection chemicals and household insecticides

Sales of crop protection chemicals and environ- Sumitomo Chemical Australia Pty Ltd 21 January 1998 mental health products

Sumitomo Chemical Enviro-Agro Asia Pacific Sdn. Bhd. 26 October 1996 R&D center for Health and Crop Sciences Sector

Registration and sales of crop protection chemi- Sumitomo Chemical (Thailand), Co., Ltd. 2 January 2008 cals and environmental health products

Health & Crop Sciences Sector Registration and promotion of crop protection Sumitomo Chemical Philippines Inc. 4 March 2008 chemicals and environmental health products

Sumitomo Chemical Vietnam Co., Ltd. 48 July 2008 Sales of crop protection chemicals

Regional Headquarters for Southeast Asia, Sumitomo Chemical (Asia Pacific) Pte Ltd 23 March 2013 South Asia and Oceania

Corporate S.C.C. Insurance Pte. Ltd. 0 January 1997 Insurance

* The numbers of employees above are as of March 2014 not including dispatched or part-time personnel.

50 Sumitomo Chemical 100 Years

Consolidated Net Sales by Sector in Southeast Asia, South Asia and Oceania (FY 2013)

(Unit: Billions of yen)

Sector Net sales

Basic Chemicals Sector 50.8

Petrochemicals & Plastics Sector 295.1

IT-related Chemicals Sector 1.7

Health & Crop Sciences Sector 26.1

The figure for IT-related Chemicals Sector includes the net sales of the IT-related Chemicals Sector of Sumitomo Chemical Singapore Pte Ltd

Medium-term Economic Forecast and remarkable growth. Activities of Group Companies: In the Basic Chemicals Sector, the MMA and acryl- Southeast Asia, South Asia and Oceania ic acid businesses were developed taking advantage of the Complex II project. Sumitomo Chemical estab- This region is mainly made up of the ASEAN bloc lished Sumitomo Chemical Singapore Pte Ltd to man- of 10 countries with a population of 600 million people age the MMA business. and a GDP of US$2.1 trillion, South Asia with a population of 1.2 billion and a GDP of US$1.9 trillion in the In the Health & Crop Sciences Sector, ever since a largest country India, and Oceania primarily Australia local company was established in Singapore in 1990 and New Zealand. for sales and marketing of household insecticides, the sector has developed the markets in Southeast Although the region experienced a period of Asia with subsidiaries in Singapore and Malaysia. In sluggish growth during the global recession in late 2008, subsidiaries were established in Thailand, the 2011, the ASEAN countries saw growth of 5 to 6% Philippines, and Vietnam as well, to hold the regis- in FY 2012 due to robust domestic demand. India, trations and promote the sales of household insec- Indonesia, and Thailand saw a slowing of growth rates ticides and other crop protection products. In 2000, in FY 2013 but recovery is forecast for FY 2014, with Sumitomo Chemical India Private Limited was estab- about 5% growth for India and 5 to 6% growth for the lished in Mumbai, with an eye toward improving the ASEAN countries. food supply and contributing to the improvement of Even in the medium to long term, it is expected lifestyle of India, a country with a population of more that the Southeast Asia, South Asia and Oceania mar- than 1.2 billion. At present, this Indian subsidiary plays kets will remain as attractive global production bases an important role in expanding sales of agrochemicals, because they have the advantage of an abundant household insecticides, and other products in the workforce due to population increase. With its poten- country. In Australia, Sumitomo Chemical Australia Pty tial as a huge consumption market, the position of Ltd was established to promote the use of agrochemi- ASEAN is also expected to rise in the global economy. cals and household insecticides in Oceania. The Sumitomo Chemical Group has recognized The Southeast Asia, South Asia and Oceania Southeast Asia as a market with high potential and region will continue to play a major role in the global focused on business expansion since Sumitomo strategy of the Sumitomo Chemical Group. In April Chemical entered the region in the 1970s, begin- 2013, Sumitomo Chemical (Asia Pacific) Pte Ltd was ning with a petrochemical complex. In South Asia, established in Singapore as Regional Headquarters Sumitomo Chemical has entered the Indian market in that will support Sumitomo Chemical’s business devel- recent years and is expanding its presence there. opment in this high-growth region by securely captur- ing emerging business opportunities, accelerating new In the Petrochemicals & Plastics Sector, Singapore business undertakings, and also serving to have vari- Petrochemical Complex began operation in 1984 with ous business operations implemented more efficiently two core companies, both Sumitomo Chemical Group and effectively. companies: Petrochemical Corporation of Singapore (Pte.) Ltd., an ethylene center, and The Polyolefin Sumitomo Chemical has positioned Singapore as Company (Singapore) Pte. Ltd., a polyolefin manufac- the regional base for training in leadership skills and turer. In 1994 the expansion of the complex, known as necessary competencies in order to enable partic- the Complex II project, was launched. Complex II was ipating leaders to exercise their full potential in the started in 1997 with a total capacity of approximately 1 execution of their responsibilities. Sumitomo Chemical million tons of ethylene. Recently, Sumitomo Chemical Training Institute (SCTi) was opened in Singapore in Asia Pte. Ltd. in Singapore, which sells products man- 2012, and Sumitomo Chemical (Asia Pacific) Pte Ltd is ufactured at Petro Rabigh in Saudi Arabia, constructed in charge of its operations. It is Sumitomo Chemical’s facilities at the end of 2013 to produce S-SBR used first overseas training center for human resource devel- for fuel-saving tires as demand for such tires is seeing opment.

51 Reports from Regional Headquarters

Report from Brussels by Sumitomo Chemical Europe S.A./N.V.

Major Group Companies in Europe and Turkey

Number of Sector Company name employees* Founded Business description

September Manufacturing and sales of diesel particulate Sumika Ceramics Poland Sp.zo.o. 11

Basic Basic 2011 filters (DPF) Sector Chemicals

Holding company of Sumika Polymer September Sumika Polymer Compounds Europe Ltd. 3 Compounds (UK) Ltd and Sumika Polymer 2007** Compounds (France) SA

September Manufacturing and sales of polypropylene Sumika Polymer Compounds (UK) Ltd 60 2007** compounds Plastics Sector Petrochemicals & September Manufacturing and sales of polypropylene Sumika Polymer Compounds (France) SA 34 2007** compounds

February Sumitomo Chemical (U.K.) plc 14 Sales of household insecticides and financing 1988

Development and sales of crop protection Sumitomo Chemical Agro Europe S.A.S. 36 October 1990 chemicals

December Development and sales of crop protection Sumitomo Chemical Italia S.r.l. 71 1993 chemicals

December Development and sales of crop protection Kenogard S.A. 42 1981 chemicals

September

Health & Crop Sciences Sector Philagro Holding S.A. 0 Equity holder in Philagro France S.A.S. 1993

Development and sales of crop protection Philagro France S.A.S. 56 June 1993 chemicals

Regional Headquarters for Europe and Turkey Sumitomo Chemical Europe S.A./N.V. 46 October 1994 Sales of chemical products

R&D and licensing in polymer organic light Cambridge Display Technology Ltd. 102 January 1992 emitting diodes (PLED) for displays and lighting as well as other plastic electronic applications Corporate

November Sumitomo Chemical Turkey A.S. 2 Sales of chemical products 2013

* The numbers of employees above are as of March 2014 not including dispatched or part-time personnel. ** The date of acquisition by Sumitomo Chemical

52 Sumitomo Chemical 100 Years

Consolidated Net Sales by Sector in Europe and Turkey (FY 2013)

(Unit: Billions of yen)

Sector Net sales

Basic Chemicals Sector 5.3

Petrochemicals & Plastics Sector 39.8

IT-related Chemicals Sector 2.4

Health & Crop Sciences Sector 46.7

The figure of IT-related Chemicals Sector includes the net sales of IT-related Chemicals Sector of Sumitomo Chemical Europe.

Medium-term Economic Forecast and Concerning the Petrochemicals & Plastics Sector, Activities of Group Companies: Europe and in 2007, plants to produce polypropylene com- Turkey pounds for automobiles and home electrical appli- ances were acquired in the United Kingdom and Economic recovery in Europe is projected to take France, contributing to business development. many years. The EU is taking measures to deal with bad debt in Greece, unstable banks in Spain, and the In the IT-related Chemicals Sector, the focus is so-called sovereign risk, but fundamental solutions on expanding the sales of high-performance poly- are still to come. Unemployment in the EU countries mers. In the fields of advanced materials, Cambridge is acute. It has reached approximately 11% in the Display Technology, Ltd. in the United Kingdom, region, and is higher than 25% in Greece and Spain. a pioneer in polymer organic light emitting diode In these two countries, over 50% of the youths aged (PLED) technology, was made a wholly-owned sub- twenty-five and under is jobless. In Italy, this figure is sidiary in 2007, promoting the development of mate- about 40%. rials and devices for PLED display and lighting.

In 2010, the EU formulated “Europe 2020” as The Health & Crop Sciences Sector established the EU’s growth strategy up to the year 2020. This subsidiaries for development and sales in the main includes increasing employment rate, promoting markets in Europe of France, Spain, Italy and the research and development, decreasing greenhouse United Kingdom, as well as in South Africa, to gas emissions, and others. In July 2013, Croatia drive the market-based sales and promotion of the became the twenty-eighth member of the EU, and products. Through this sales network, Sumitomo Turkey and former Eastern European bloc countries Chemical sells not only its own agrochemicals but are under consideration for membership, indicat- also the products of Nufarm Ltd., an Australian com- ing that the EU continues to be a centripetal force. pany in which Sumitomo Chemical’s ownership is Negotiations for free trade with Japan and the United 23%. Sumitomo Chemical engages also in expand- States are ongoing, and the EU is doing what it can ing sales of methionine, a feed additive. to expand markets in and outside the region to reac- For Europe and Turkey, Sumitomo Chemical tivate its economy. Europe S.A./N.V. was designated Regional Although the European region is plagued by eco- Headquarters in January 2014. nomic uncertainty, it is still an advanced and enormous market with 500 million people. The Sumitomo Chemical Group will continue to position it as an important region, planning proactive business activities.

In the Basic Chemicals Sector, Sumitomo Chemical has been selling resorcinol and dyes, and in 2013, it completed a DPF (diesel particulate filter) plant in Poland. As new and stricter vehicle emission regulations are enacted in Europe, the Sumitomo Chemical Group will actively market DPF, targeting it to be one of the core businesses in the future.

53 Reports from Regional Headquarters

Report from New York by Sumitomo Chemical America, Inc.

Major Group Companies in North America

Number of Sector Company name employees* Founded Business description

Manufacturing and sales of polypropylene Sumika Polymer Compounds America, Inc. 48 August 2007 compounds

November Sumika Polymers North America Inc. 16 Sales of polypropylene compounds

Petrochemicals 2011 & Plastics Sector

Manufacturing and sales of MOEPI wafers and Sumika Electronic Materials, Inc. 55 January 2003 other IT-related materials IT-related IT-related Chemicals SectorChemicals

Development and sales of crop protection Valent U.S.A. Corp. 242 April 1988 chemicals

Development, sales and manufacturing of crop Valent BioSciences Corp. 137 January 2000 protection chemicals and biorationals Health &

Development and sales of household insecti- Crop Sciences Sector Sciences Crop McLaughlin Gormley King Company 108 April 1908 cides

Regional Headquarters for North America Sumitomo Chemical America, Inc. 28 May 1976 Sales of chemical products

Corporate Sumitomo Chemical Capital America, Inc. 0 April 1997 Financing

* The numbers of employees above are as of March 2014 not including dispatched or part-time personnel.

Valent BioSciences Corp. (VBC)

VBC Research Center Sumitomo Chemical America, Inc.

54 Sumitomo Chemical 100 Years

Consolidated Net Sales by Sector in North America (FY 2013)

(Unit: Billions of yen)

Sector Net sales

Basic Chemicals Sector 2.1

Petrochemicals & Plastics Sector 11.8

IT-related Chemicals Sector 2.4

Health & Crop Sciences Sector 77.4

The figure for Basic Chemicals Sector includes the net sales of the Basic Chemicals Sector of Sumitomo Chemical America, Inc.

Medium-term Economic Forecast and ical pesticide and post-harvest processing business- Activities of Group Companies: North America es as the agriculture-related markets were expected to grow. In the field of household insecticides, in Following the 2008 Lehman Brothers financial 2012, Sumitomo Chemical acquired a majority share- crisis, the real GDP of the United States went into holding in the sales affiliate to strengthen its busi- negative growth in 2008 and 2009. In 2010, it recov- ness foundation in the United States. ered to 2% growth. Low growth, however, continued, with real GDP of only 2.2% in 2012. Factors behind Concerning the Petrochemicals & Plastics Sector, this sluggish growth included the European debt cri- Sumitomo Chemical has focused on the businesses sis, US financial problems, delays of improvement in of polypropylene compounds and TPE, high-per- housing and labor markets, and weak growth in performance materials, used in automobile parts as sonal income and consumption. According to corpo- demand for them is expected to grow in the United rate economic forecasts (Blue Chip survey in March), States. Sumitomo Chemical has manufacturing growth will be 1.9% in 2013 and 2.7% in 2014, with bases in the United States and will expand the pro- a sluggish economy continuing in 2013 but some duction capacity to meet increased demand. improvement the following year. In the IT-related Chemicals Sector, Sumitomo Medium-term to long-term growth is forecast Chemical affiliates in the United States are manufac- to be driven by (1) abundant agricultural resources, turing and selling materials used to make semicon- (2) natural energy resources, such as shale gas, ductors and electronic components for smartphones (3) a steady growth in population (1% a year, for and tablet computers. an increase of three million a year), (4) excellent In 1976, Sumitomo Chemical America, Inc. (SCAI) research institutes to accelerate innovations, and (5) was founded in New York to represent the Sumitomo proximity to South America, a growing market. Since Chemical Group companies in the United States. the late 1990s, in particular, progress in excavation SCAI collects and dispatches information on eco- technology has meant a rapid increase in shale gas nomic and political trends, studies and analyzes production that could make the United States a trends in technology, and builds and maintains rela- leading exporter of natural gas. This should improve tionships with international organizations, such as employment opportunities and play a part in boost- the United Nations. In January 2014, SCAI became ing real GDP. Regional Headquarters for North America. The Sumitomo Chemical Group puts its highest level of priority on the US market due to the size of its market and potential for growth in the medium to long term. All Business Sectors are taking strong initiatives.

In the Health & Crop Sciences Sector, Sumitomo Chemical established Valent U.S.A. Corp. in 1988 to commence agrochemical development and sales, which enabled Sumitomo Chemical to make a full- scale entry into the US market. After that, strategic mergers and acquisitions were made to enter biolog-

55 The Sumitomo Spirit and Sumitomo Chemical’s Business Philosophy

The Sumitomo Spirit

Sumitomo’s Business Principles

1. Sumitomo shall achieve prosperity based on solid foundation by placing prime importance on integrity and sound management in the conduct of its business.

2. Sumitomo’s business interest must always be in harmony with public interest; Sumitomo shall adapt to good times and bad times but will not pursue immoral business.

Sumitomo Chemical’s Business Philosophy

1. We commit ourselves to creating new value by building on innovation.

2. We work to contribute to society through our business activities.

3. We develop a vibrant corporate culture and continue to be a company that society can trust.

Sumitomo Chemical’s Business Philosophy is embodied in these three sentences. Such management principles as “placing prime importance on integrity and sound management” and “adapting to good times and bad times and not pursuing immoral business” were first seen in the “Rules Governing the Sumitomo family” enacted in 1882. Other business teachings that Sumitomo passed from one generation to the next include “giving back to the state and society” and “mutual prosperity, respect for the public good.” Sumitomo Chemical took a fresh look at its fundamental business principles, mission and values, and committed them to writing.

56 Sumitomo Chemical 100 Years

Recent Sales and Profits

(Unit : Billions of yen)

2010/3 2011/3 2012/3 2013/3 2014/3 Actual Actual Actual Actual Actual

Net sales* Basic Chemicals ¥ 203.3 ¥ 248.5 ¥ 284.3 ¥ 263.5 ¥ 286.9 Petrochemicals & Plastics 481.5 649.9 672.4 693.9 792.0 Fine Chemicals 86.7 88.9 - - - IT-related Chemicals 265.2 322.3 293.1 300.0 362.3 Agricultural Chemicals (Health & Crop Sciences) 211.5 215.8 264.1 262.6 327.0 Pharmaceuticals 267.5 365.9 380.5 378.6 418.8 Others 105.1 91.2 53.4 54.0 56.8 Total 1,620.9 1,982.4 1,947.9 1,952.5 2,243.8

Operating income (loss)* Basic Chemicals 1.3 21.3 9.3 (6.4) (10.9) Petrochemicals & Plastics (0.2) 11.1 6.2 (3.2) 4.9 Fine Chemicals 3.6 0.1 - - - IT-related Chemicals 6.3 26.1 11.0 11.7 34.9 Agricultural Chemicals (Health & Crop Sciences) 29.3 22.4 26.5 26.3 38.2 Pharmaceuticals 29.9 26.9 20.9 30.9 47.1 Others 6.7 5.8 7.7 8.0 8.4 Elimination (25.4) (25.8) (20.9) (22.2) (21.8) Total 51.5 88.0 60.7 45.0 100.8

Ordinary income 35.0 84.1 50.7 50.3 111.1

Net income (loss) 14.7 24.4 5.6 (51.1) 37.0 Assets 2,383.9 2,367.3 2,337.0 2,472.1 2,788.5 Shareholders' equity/Net assets 821.4 758.9 720.9 747.5 934.5 Interest-bearing debt 997.9 1,040.3 1,053.0 1,060.6 1,074.6 D/E ratio (times) 1.2 1.4 1.5 1.4 1.1 Shareholders' equity to total assets (%) 24.1 22.1 20.8 20.1 23.1 Net income (loss) per share (yen) 8.92 14.86 3.42 (31.25) 22.62 Dividend per share (yen) 6.00 9.00 9.00 6.00 9.00 Capital expenditures 103.2 98.7 155.1 116.1 143.4 Depreciation and amortization 116.1 147.0 114.9 115.5 115.7 R&D expenses 117.3 138.1 122.3 125.0 141.3 ROE (%) 2.6 4.5 1.1 (10.4) 6.5 ROA (%) 0.7 1.0 0.2 (2.1) 1.4 Employees 27,828 29,382 29,839 30,396 30,745 Consolidated subsidiaries 143 146 145 162 164

* As of April 1, 2011, Fine Chemicals segment was eliminated and reorganized. The business in this segment was transferred to Basic Chemicals segment or Agricultural Chemicals segment. Following this change Agricultural Chemicals segment changed its name to "Health & Crop Sciences" segment.

57 Sumitomo Chemical Locations in Japan (as of Jul. 1, 2014)

Misawa Works

Nagoya Branch Office

Gifu Plant

Head Office (Osaka)

Okayama Plant Tsukuba Material Development Laboratory Advanced Materials Research Laboratory IT-related Chemicals Research Laboratory (Tsukuba) Oita Works

Fukuoka Branch Office

Chiba Works Industrial Technology & Research Laboratory (Chiba) Petrochemicals Research Laboratory

Head Office (Tokyo) Osaka Works Industrial Technology & Research Laboratory (Osaka) Organic Synthesis Research Laboratory Environmental Health Science Laboratory Basic Chemicals Research Laboratory (Osaka) IT-related Chemicals Research Laboratory (Osaka)

Utajima Pilot Production Dept. Health & Crop Sciences Research Laboratory (Utajima)

Health & Crop Sciences Research Laboratory (Takarazuka)

Ehime Works Ohe Works Production & Safety Fundamental Technology Center Industrial Technology & Research Laboratory (Ehime) Basic Chemicals Research Laboratory (Ehime) IT-related Chemicals Research Laboratory (Ohe)

58 Sumitomo Chemical 100 Years

Major Companies of Sumitomo Chemical Group: Japan (as of Jul. 1, 2014)

Basic Chemicals Sector Health & Crop Sciences Sector Taoka Chemical Co., Ltd. Koei Chemical Co., Ltd. Sumika Bayer Urethane Co., Ltd. Sumika Technoservice Corporation Sumika Acryl Co., Ltd. SC Environmental Science Co., Ltd. Sumika Chemtex Co., Ltd. Sumika Agro Manufacturing Co., Ltd. EGS Co., Ltd. Sumika Green Corporation Sumika Alchem Co., Ltd. Sumika Agrotech Co., Ltd. Asahi Chemical Co., Ltd. SanTerra Co., Ltd. Ceratec Co., Ltd. Sumitomo Chemical Garden Products Inc. Niihama Coal Center Co., Ltd. Nihon Ecoagro Co., Ltd. Nihon Methacryl Monomer Co., Ltd. Rainbow Chemical Co., Ltd. Sumika High-Purity Gas Company Sumika Fukuei Agro K.K. Nihon Ammonia Terminal Co., Ltd. TS Agro K.K. SUMIKA FARM Nagano Co., Ltd. Petrochemicals & Plastics Sector SUMIKA FARM Oita Co., Ltd. Japan-Singapore Petrochemicals Co., Ltd. SUMIKA FARM Yamagata Co., Ltd. Nihon Singapore Polyolefin Co., Ltd. SUMIKA FARM Mie Co., Ltd. Nippon A&L Inc. SUMIKA FARM Ibaraki Co., Ltd. Nihon Oxirane Co., Ltd. Oita General Service Co., Ltd. Sumika Styron Polycarbonate Limited Keiyo Ethylene Co., Ltd. Pharmaceuticals Sector Tobu Butadiene Co., Ltd. Sumitomo Dainippon Pharma Co., Ltd. Nihon Isobutylene Co., Ltd. Nihon Medi-Physics Co., Ltd. Evolue Japan Co., Ltd. Sumika-Kakoushi Co., Ltd. Others Thermo Co., Ltd. Sumika Logistics Co., Ltd. Sumika Middle East Co., Ltd. Sumitomo Chemical Engineerig Co., Ltd. Sumika Rabigh Industrial Park Development Co., Ltd. Ciatec, Ltd. Sumika Color Co., Ltd. Sumitomo Bakelite Co., Ltd. Sumika Plastech Co., Ltd. Sumitomo Seika Chemicals Co., Ltd. Chiba General Service Co., Ltd. Shinto Paint Co., Ltd. Sumitomo Joint Electric Power Co., Ltd. IT-related Chemicals Sector Sumika Finance Co., Ltd. O.L.S. Co., Ltd. Sumika Chemical Analysis Service, Ltd. Sumika-Radel Company Ltd. Sumika Real Estate Co., Ltd. Sumika Assembly Techno Co., Ltd. Career Support Co., Ltd. Sumika Human Support Co., Ltd. Sumika Technical Information Service, Inc. Osaka General Service Co., Ltd. Sumitomo Chemical Systems Service Co., Ltd.

CO2 M-Tech Co., Ltd. Sunrise farm Saijo Co., Ltd. Sunrise Saijo Processing Center Co., Ltd. Sunrise farm Toyota Co., Ltd.

59 Major Companies of Sumitomo Chemical Group: International (as of Jul. 1, 2014)

Basic Chemicals Sector Zhuhai Sumika Polymer Compounds Co., Ltd. Sumika Ceramics Poland Sp. zo.o. Sumika Polymer Compounds Dalian Co., Ltd. Sumitomo Chemical Singapore Pte Ltd NOC Asia Limited Singapore Methyl Methacrylate Pte. Ltd. Sumitomo Chemical Polymer Compounds Saudi Arabia Sumipex (Thailand) Co., Ltd. Company Ltd. Bara Chemical Co., Ltd. Sumika Polymer Compounds (UK) Ltd Sumipex TechSheet Co., Ltd. Sumika Polymer Compounds (France) SA LG MMA Corp. New Zealand Aluminium Smelters Ltd. IT-related Chemicals Sector Sumika Electronic Materials, Inc. Petrochemicals & Plastics Sector Sumika Electronic Materials (Wuxi) Co., Ltd. Sumika Polymers North America Inc. Sumika Huabei Electronic Materials (Beijing) Co., Ltd. Sumika Polymer Compounds America, Inc. Sumika Electronic Materials (Hefei) Co., Ltd. Sumika Polymer Compounds Europe Ltd. Sumika Electronic Materials (Shanghai) Co., Ltd. Rabigh Refining and Petrochemical Company Sumika Electronic Materials (Shanghai) Corporation Rabigh Conversion Industry Management Services Company Sumika Electronic Materials (Shenzhen) Co., Ltd. Sumitomo Chemical Asia Pte. Ltd. Sumika Technology Co., Ltd. Petrochemical Corporation of Singapore (Pte.) Ltd. SSLM Co., Ltd. The Polyolefin Company (Singapore) Pte. Ltd. Dongwoo Fine-Chem Co., Ltd. Sumika Polymer Compounds (Thailand) Co., Ltd. Sumika Electronic Materials (Xi’an) Co., Ltd. Jilin Dongcheng Sumika Polymer Compounds Co., Ltd.

60 Sumitomo Chemical 100 Years

Health & Crop Sciences Sector Shanghai Lifetech Household Products Co., Ltd. Valent U.S.A. Corp. Sumitomo Chemical Taiwan Co., Ltd. Valent BioSciences Corp. Sumitomo Chemical Agro Seoul, Ltd. Pace International, LLC McLaughlin Gormley King Company Sumitomo Chemical do Brasil Representações Limitada Valent de Mexico S.A. de C.V. Pharmaceuticals Sector Valent BioSciences de Chile S.A. Sunovion Pharmaceuticals Inc. Kenogard S.A. Dainippon Sumitomo Pharma America Holdings, Inc. Sumitomo Chemical (U.K.) plc Sumitomo Pharmaceuticals(Suzhou) Co., Ltd. Philagro France S.A.S Boston Biomedical, Inc. Sumitomo Chemical Agro Europe S.A.S. Philagro Holding S.A. Others Sumitomo Chemical Italia S.r.l. Sumitomo Chemical America, Inc. Philagro South Africa (Pty) Ltd. Sumitomo Chemical Capital America, Inc. Vector Health International Ltd. Sumitomo Chemical Europe S.A./N.V. Sumitomo Chemical East Africa Limited Cambridge Display Technology Ltd. Sumitomo Chemical India Private Limited S.C.C. Insurance Pte. Ltd. Sumitomo Chemical Enviro-Agro Asia Pacific Sdn. Bhd. Sumitomo Chemical (China) Co., Ltd. Sumitomo Chemical (Thailand), Co., Ltd. Sumitomo Chemical (Asia Pacific) Pte Ltd Sumitomo Chemical Philippines Inc. Sumika Jingang Trading (Dalian) Co., Ltd. Sumitomo Chemical Vietnam Co., Ltd. Sumika Business Service (Dalian) Co., Ltd. Sumitomo Chemical Australia Pty Ltd Sumitomo Chemical Turkey A.S. Dalian Sumika Jingang Chemicals Co., Ltd. Dalian Sumika Chemphy Chemical Co., Ltd. Sumitomo Chemical Shanghai Co., Ltd.

61 Chronology of Sumitomo Chemical

Year Month

1590 Riemon Soga, who married the elder sister of Masatomo Sumitomo, begins a copper refining and smithing business in Kyoto. c. 1600 Riemon Soga develops a technique (nanban-buki ) for separating silver from crude copper. c. 1630 Masatomo Sumitomo takes a Buddhist name, Monjuin Kakyu, and begins a shop to deal in books and medicine in Kyoto. 1630 Tomomochi Sumitomo (eldest son of Riemon and son-in-law of Masatomo) relocates copper refining operations to Osaka. 1690 Tomoyoshi Sumitomo, the fourth generation in the family business, discovers copper in Besshi and opens the Besshi Copper Mine in 1691. 1891 Oct. The House of Sumitomo changes its governing rules and establishes its “Business Principles.” Gas emissions containing sulfur dioxide from the smelting plant causes damage to locally grown crops, and the local people petition the 1893 Sep. prefectural government (beginning of the gas emission pollution problem). 1905 Jan. The smelting plant is moved to Shisaka Island, but the pollution worsens. To rid of the polluting gas emissions, the decision is made to collect the sulfur dioxide and transform it into sulfuric acid, and use it to make 1911 Autumn calcium superphosphate (fertilizer). 1913 Sep. Sumitomo Fertilizer Works is formed in Niihama in Ehime Prefecture as a business directly operated by Sumitomo General Head Office. Sumitomo Fertilizer Works, predecessor of Sumitomo Chemical and present-day Ehime Works, commences business (calcium superphosphate 1915 Oct. is shipped for the first time). 1925 Jun. The Sumitomo Fertilizer Works, Ltd. is established as an independent company. 1931 Apr. Full-scale production of ammonia and ammonium sulfate begins. 1934 Feb. Company name is changed to Sumitomo Chemical Co., Ltd. 1934 Jun. Sumitomo Aluminium Smelting Co., Ltd. is established. 1938 Apr. Full-scale production of methanol and formalin begins. Merger with Japan Dyestuff Manufacturing Company takes Sumitomo Chemical into dyestuffs and pharmaceuticals (present-day Osaka Works 1944 Jul. and Oita Works). 1946 Feb. Name is changed to Nisshin Chemical Co., Ltd. 1949 Nov. All facilities of Sumitomo Aluminium Smelting Co., Ltd. are taken over. 1952 Aug. Name is changed back to Sumitomo Chemical Co., Ltd. Full-scale production of ethylene and its derivatives (low-density polyethylene) begins in Ehime, and Sumitomo Chemical enters the 1958 May petrochemical business. 1962 Apr. Sumitomo Chemical develops and begins sales of Sumithion, an organophosphorus insecticide for agricultural use. 1965 Nov. Central Research Laboratory is established (subsequently renamed as Takatsuki Research Laboratory; closed in March 2003). 1965 Nov. Sumitomo Chiba Chemical Co., Ltd. is established (merges with Sumitomo Chemical in Jan. 1975; present-day Chiba Works). 1970 Jan. Sumitomo Chiba Chemical Co., Ltd. completes ethylene production facilities with annual capacity of 300,000 tons. 1971 Jul. Takarazuka Research Laboratory is established, strengthening research capabilities for pharmaceuticals and agrochemicals. Sumitomo Aluminium Smelting Co., Ltd, is established (Sumitomo Chemical transfers aluminum business to the company; the company is 1976 Jul. liquidated in 1986). 1977 Aug. Petrochemical Corporation of Singapore (Pte.) Ltd. (PCS) is established. 1978 Jan. Pyrethroid household insecticide production capabilities are strengthened when Misawa Works begins operations. 1980 May The Polyolefin Company (Singapore) Pte. Ltd. (TPC) is established. 1982 Feb. PT Indonesia Asahan Aluminium (INALUM) begins operations. 1983 Jan. Ehime Works ethylene plant and derivative manufacturing plants are closed, and production is concentrated in Chiba Works. 1984 Feb. Sumitomo Chemical and Inabata & Co., Ltd. jointly establish Sumitomo Pharmaceuticals Co., Ltd. (Sales begin in Oct. 1984.) 1984 Feb. The Singapore Petrochemical Complex begins operations. 1985 Nov. Ammonia production facilities discontinue operations (completely disengage from ammonia production) at Ehime Works. 1988 Apr. Valent U.S.A. Corp. is established to develop and sell agrochemicals in the United States (becomes 100% subsidiary in Sept. 1991). 1989 Mar. Tsukuba Research Laboratory is established.

62 Sumitomo Chemical 100 Years

Year Month

The business of Sumitomo Chemical is reorganized into four sectors: Basic Chemicals, Petrochemicals & Plastics, Fine Chemicals and 1994 Apr. Agricultural Chemicals. The functions of manufacturing, sales & marketing, research & development and planning & coordination are reorganized and integrated under each sector. Sumitomo Chemical Agro Europe S.A.S. takes over agrochemical operations of Sumitomo Chemical France and Sumitomo Chemical UK, and 1994 Jul. makes a start as the European base for agrochemical production, sales, and research & development. 1995 Dec. All Sumitomo Chemical plants in Japan obtain ISO9002 certification. 1996 Jul. Sumitomo Chemical Singapore Pte. Ltd. is established. The second phase of the Singapore Petrochemical Complex begins operations. Combined with the first phase, annual capacity for ethylene 1997 Apr. production reaches approximately 1 million tons. 1998 Oct. Facilities for MMA monomer & polymer and acrylic acid in Singapore are completed. 1999 Mar. All Sumitomo Chemical plants in Japan obtain international environmental management systems standards certification, ISO14001. 2000 Jan. Biological pesticide business of Abbott Laboratories is acquired, and Valent BioSciences Corp. is established. 2000 Nov. Announcement is made of planned comprehensive merger with Mitsui Chemicals, Inc. in 2003. 2001 May Household insecticide business is acquired from Aventis Crop Science S.A. The IT-related Chemicals Sector is established, and Sumitomo Chemical begins a six-sector organization: Basic Chemicals, Petrochemicals & 2001 Oct. Plastics, Fine Chemicals, IT-related Chemicals, Agricultural Chemicals, and Pharmaceuticals. 2001 Oct. Olyset Net receives the world's first recommendation from WHO as a long-lasting insecticidal anti-malaria mosquito net. Sumitomo Chemical’s joint venture Sumitomo Chemical Takeda Agro Co., Ltd. takes over the agrochemical business of Takeda Pharmaceutical 2002 Nov. Co., Ltd. (JV partner) and begins business (JV becomes wholly owned in Nov. 2007). 2003 Mar. Merger with Mitsui Chemicals, Inc. is cancelled. Dongwoo STI, a Korean subsidiary (established in April 2002; present-day Dongwoo Fine-Chem Co., Ltd.), begins operation of large-scale production 2003 Apr. facilities for color filters for LCD panels. 2003 Jul. Sumitomo Chemical Charter for Business Conduct is established. Dongwoo Optical Films, a Korean subsidiary (established in Oct. 2002; present-day Dongwoo Fine-Chem Co., Ltd.), begins operation of comprehensive 2003 Sep. production facilities for LCD polarizing films. Subsidiary Sumika Technology Co., Ltd. (established in June 2001) in Taiwan begins operation of comprehensive production facilities for LCD 2004 Apr. polarizing films. 2004 Jul. Sumika Fine Chemicals Co., Ltd. merges with Sumitomo Chemical. 2004 Jul. Sumika Electronic Materials (Wuxi) Co., Ltd. is established in Wuxi City in China as a production base for IT-related materials. 2005 Sep. Rabigh Refining and Petrochemical Company (Petro Rabigh) is established as a fifty-fifty joint venture between Sumitomo Chemical and Saudi Aramco. 2005 Oct. Sumitomo Pharmaceuticals Co., Ltd. and Dainippon Pharmaceutical Co., Ltd. merge to become Dainippon Sumitomo Pharma Co., Ltd. 2008 Jan. Petro Rabigh is listed on the Saudi Arabian stock market. 2008 Mar. Corporate Slogan and Corporate Statement are established. 2009 Jan. Sumitomo Chemical's Business Philosophy is established. 2009 Apr. The ethane cracker facilities, the main plant of the Petro Rabigh refining and petrochemical complex, begin operations. 2009 Oct. Dainippon Sumitomo Pharma Co., Ltd. acquires US pharmaceutical company Sepracor, Inc. (present-day Sunovion Pharmaceuticals, Inc.) 2010 Apr. Sumitomo Chemical purchases 20% of stock in Nufarm Limited of Australia. Sunovion Pharmaceuticals, Inc., affiliate of Dainippon Sumitomo Pharma Co., Ltd., launches Latuda, a medication for schizophrenia, in the 2011 Feb. United States. The Fine Chemicals Sector is discontinued. 2011 Apr. The business of Sumitomo Chemical is reorganized into five sectors: Basic Chemicals, Petrochemicals & Plastics, IT-related Chemicals, Health & Crop Sciences, and Pharmaceuticals. 2012 May Plant to mass-produce touch sensor panels at Dongwoo Fine-Chem Co., Ltd. begins operations. 2012 May Decision is made to proceed with Rabigh Phase II Project. 2013 Feb. Discontinuation by Sept. 2015 of Chiba Works ethylene production facilities is announced.